Ford Motor Co. wants to deny new vehicles to online auto brokers in the USA.
Ford Division and Lincoln Mercury have threatened dealers with severe penalties for selling new vehicles to Internet brokers, who buy cars from dealers for resale to consumers.
Dealers are the sole source of new-vehicle inventory for those Internet companies.
'We wanted to remind dealers that it is a violation of their sales and service agreement to sell new vehicles to anybody except direct customers. That's nothing new,' said Ford spokeswoman Anne Doyle. 'What is new is the broker. Some Internet companies are brokers, and we have to remind dealers who hadn't thought of it.'
So far, though, Ford has not imposed any sanctions. Carorder.com says Ford threats will not harm its business. But online brokers are causing a lot of anxiety. Said a California Ford dealer, who asked not to be named: 'They (online brokers) are endangering my business. They buy cars from a dealer, then turn around and sell them for less than they can buy them from us. They are trying to build volume so they can go public. The only way I can compete is if I sell at a loss.'
Bob Brisco, Carsdirect.com CEO, said Ford's anti-broker policy has not affected his company's operations.
'We'll continue to source Ford vehicles through the franchised Ford dealers in our network as before. Our goal remains the same to continue operating in a manner that is consistent with dealer and manufacturer standards.'
Late last year, Carsdirect.com said it was selling about 1,400 new vehicles per month. The company currently has supply contracts with 2,500 dealers of various makes.
Carorder.com, another Internet company that has been viewed as a broker in some US states, said the Ford policy will not affect its operations. But the company is attempting to buy dealerships to avoid acting as a middleman in car sales.
Ford's prohibition will not affect Internet companies that simply refer customers to dealerships for a fee, such as Autobytel.com.
In a March 24 letter to all dealers, Jim O'Connor, president of Ford Division, warned dealers they should sell new vehicles only to consumers and fleets that have no intention of reselling the vehicles.
Ford said dealers caught selling to online brokers could lose the right to acquire additional Ford and Lincoln Mercury franchises.