Ford Offers To Buy Back 81 Dealers [Archive] - Ford Inside News Community

: Ford Offers To Buy Back 81 Dealers

03-10-2008, 01:09 AM
Ford offers to buy back 81 stores

Dealer development retailers ask to extend April 1 deadline

Amy Wilson
and Arlena Sawyers

Automotive News | March 10, 2008 - 12:01 am EST

DETROIT ó Ford Motor Co. is offering a one-time buyout to the 81 members of its dealer development program, most of them minorities.

But some dealers say they need more time to decide than the April 1 deadline imposed by Ford.

Under the offer, Ford Motor says it will refund dealers' full investment if they give up their Ford or Lincoln-Mercury dealerships, even if their current stake is worth less than their original investment.

Operators whose dealerships are their only source of income may get an additional $100,000, Ford says.

Ford outlined the offer to dealers in late February. There are 81 dealerships in the development program, including 62 minority-owned stores. The company includes blacks, Hispanics, Asians, Native Americans and women in the program.

"Ford is taking this action in an effort to ensure a sustainable dealer development program," program director Jamy Hall wrote in a letter to dealers that was obtained by Automotive News.

Hall declined to comment, and Ford declined to predict how many dealers will take the buyout. Those dealers' stores either will be closed or reassigned.

Previously, Ford had offered buyouts on a case-by-case basis to struggling dealers in the program. After Ford disclosed its plan to end that practice, Ford's two minority dealer associations asked the company to extend its April 1 deadline.

On Friday, Ford confirmed it will consider stretching its deadline for dealers who ask for more time. But some minority dealer advocates say the buyout raises questions about Ford's commitment to minority dealers. Ford rejects the suggestion.

By the numbers
Facts about Ford Motorís minority dealers and dealer development program
309: Number of minority-owned Ford Motor dealerships in U.S.*
6.7: Percentage of Ford Motor dealerships owned by minorities*
81: Dealerships in Fordís dealer development program at end of 2007
62: Number of minority-owned Ford Motor dealer development stores
* Includes Premier Automotive Group dealerships
Source: Ford Motor Co.

Shrinking network

The dealer development program gives would-be dealers who lack adequate capital an opportunity to acquire their own stores. Using the store's profits, the dealer gradually buys out Ford's stake.

But when a store loses money, a dealer can struggle for years in the program without repaying Ford's initial investment.

This problem has grown more acute as Ford shrinks its U.S. retail network to reflect declining sales. The consolidation is intended to improve sales and profits at surviving dealerships.

Over the past two years, Ford has eliminated 340 stores, leaving it with 4,056 domestic-brand dealerships in the United States as of Jan. 1. The number of Ford's minority-owned dealerships fell last year by 28, to 309, the company says.

The number of stores in Ford's dealer development program dropped by 21 last year, to 81 at the end of 2007. A handful of those stores closed. Dealers at eight stores bought out Ford's stake. Nine additional stores were sold to private-capital investors.

Ford added two dealerships to its development portfolio in 2007, after adding six stores in 2006 and 22 in 2005.

"It's definitely slowed down, but that obviously reflects the economy and other things," says Ford spokesman Jim Cain. Ford "absolutely" remains committed to dealer development, he says.

Wait until June

The Ford Motor Minority Dealers Association, which represents mostly black dealers, wants Ford to give dealers at least 90 days to decide on the buyout offer. That would push the deadline back to June 1.

Executive Director A.V. Fleming outlined his proposal in a note to the association's members. Fleming says he expects as many as 17 minority dealers to consider the buyout.

The Alliance of Ford Motor Minority Dealers, which mostly represents Hispanic dealers, also wants Ford to delay its deadline. Alliance President Jose Pozos says Ford is asking dealers ó some of them profitable ó to make a big decision at an uncertain time for the company.

"I don't think even Ford Motor Company knows what its future holds," says Pozos, a Ford-Lincoln-Mercury dealer in Wichita Falls, Texas, who graduated from the development program last year. "Why go there now?"

One dealer who got the buyout offer says he will reject it. "It's just targeted at minorities because they're low-hanging fruit," argues the dealer, who asked not to be identified because he says he fears retribution from Ford.

Ford spokesman Cain denies that the company is targeting minority dealers. Instead, he says, Ford wants to provide a "graceful exit" to dealer development operators who are struggling.

Dealers to meet

The Hispanic dealers' alliance says it plans to meet next month with Ford executives. Alliance Chairman Fernando Varela says the group wants to discuss the expansion of Ford's pool of minority dealer candidates.

Varela, a multifranchise dealer in Palestine, Texas, also participated in the development program. He says Ford is doing more for its minority dealers than other automakers.

"In tough market conditions (when) you're not making any money, they're offering you something," Varela says. "Other manufacturers let you walk off, and you lose your investment."


Logans Run
03-17-2008, 02:55 PM
Lincoln dealer near me Dulaney Lincoln Mercury(North Baltimore County MD) just posted a sign thanking people for 50 years and at the same time telling them to now service their cars at the Ford dealer Bob Davidson Ford who apparently just bought them out. They bought the other Ford dealer (Towson Ford) last year. These dealerships both looked very dated (probably 1950's buildings) and never displayed new cars well. Bob Davidson has a large lot, but it still looks like something out of the 60's, and I just hope they build a new showroom for Lincoln Mercury...I doubt it though.
This is a major problem Lincoln/Mercury...and even Ford faces now. Dealerships are not putting money into their showrooms.