FRANKFURT - Ford of Europe is negotiating to buy stakes in several large continental European dealer groups. The development follows major retail investments by Ford in the UK and the USA.
With the future of European car retailing rules in doubt, Ford is placing a priority on making its dealerships more profitable, said Earl Hesterberg, vice president of marketing, sales and service for Ford of Europe. Giving dealers larger territories, especially dealers in big cities, can help them make more money.
'It's also possible we would consider investing in large cities on the continent of Europe, especially where the cost of land and building is an issue for private capital,' he said. 'We're discussing several opportunities, but for obvious reasons they'll remain confidential.'
Europe's block exemption rules protect the exclusive distribution system auto manufacturers and their franchised dealers enjoy in Europe. But block exemption is expected by many to be killed off in 2002, because of continuing criticisms of car retailing in Europe.
Ford has already bought a stake in several large dealer groups in the UK and USA. Ford has set up dealer companies under the Auto Collections brand name in several US cities, including Tulsa and Salt Lake City. Most recently, Ford bought 49 percent of a holding company that owns the Ford dealerships of Pendragon plc, one of its largest UK dealer groups. Altogether, Ford now has a stake in about 15 percent of its UK distribution. 'Some of our competitors have been operating factory-owned dealerships for many years,' said Hesterberg. 'Renault has many factory-owned dealerships, for example.'
Such 'factory branches' have become an important competitive factor in some German cities in particular, he said, and Ford must find some way to compete with them.
Hesterberg stressed that the dealership situation varies substantially from country to country and even within countries. In Germany and France, for example, there is a gulf separating big city dealerships from their small rural counterparts.
Ford must strike a balance between consolidating its network and keeping main dealers and service satellites convenient for customers, he said.
As Ford consolidates, it will have fewer main dealerships, but it will probably keep an equal number of sub-dealers where customers can get their vehicles serviced.
Hesterberg said: 'A driving theme of our operations is consumer focus and we want to make sure our customers don't have to drive too far to have a vehicle serviced, or even to shop for a Ford product.'