FRANKFURT - Ford of Germany has gone to court to prevent gray market dealers from selling Ford models imported from the US.
Meanwhile, Volkswagen has threatened legal action against German dealers who are importing cars directly from Mexico.
Ford has filed a lawsuit against a dealer in Mainz as a test case. Depending on the outcome, it will decide whether to go after other gray market dealers.
In January 1995, Germany adapted an EC rule to German law which protects owners of trademarks against parallel imports by unauthorized dealers.
The first carmaker to use the new law was Chrysler Import Germany GmbH. The independent distributor took 72 direct importers to court last summer, but a Frankfurt judge in January rejected the Chrysler suits. He ruled that the independent distributor had not proved trademark ownership.
Although Chrysler Import failed in the courts, gray market sales of Chrysler and Jeep models have fallen. Chrysler-Jeep registrations in Germany dropped 17 percent in the first quarter to 4,908. About 15 percent of the sales are thought to have been gray market units, down from about 40 percent of sales last year.
Gray market importers sell cars cheaper than authorized dealers and offer different versions. The list price of Chrysler's Voyager SE is DM50,995 ($30,000). 'Gray' versions have sold for as little as DM39,900. But gray market cars are not covered by manufacturer warranties.
Ford's model lineups for Germany and the US differ. Gray market importers sell mainly Mustangs, which Ford of Germany does not import. Several other US models are available, including the Taurus, Probe and Explorer.
Ford may fare better in the courts than Chrysler. Ford Werke has held trademark rights in Germany since 1906.
Ford also has a different legal strategy than Chrysler. It is suing only one dealer, Auto-Fox in Mainz-Kastel, one of the largest German importers of US cars. Auto-Fox, which was also sued by Chrysler, has been selling North American cars since the 1950s.
Volkswagen is also using the German trademark law to control imports of Golfs and Beetles built in Mexico. A demand to stop selling was sent to about 20 non-licensed dealers in mid-June. The dealers were threatened with lawsuits.
A Frankfurt judge is expected to decide the Ford case in early July. If Ford wins its case, the company says it will file lawsuits against other dealers. Han Tjan, spokesman for Chrysler Europe in Brussels, said Chrysler may revive the issue in Germany if Ford wins. A Chrysler Import Germany spokesman declined to comment.
Meanwhile, Auto-Fox's lawyer Uwe Heymann says the trademark law is being abused.
'Everyone talks about free trade and here the markets are being sealed off,' he said.
Germany's organization of independent importers (Bundesverband Freier Kfz-Importeurre e.V) wants the EC to clarify how the law should be applied and has asked that German judges hold off rulings until the commission decides.