Ford plans to reduce number of dealers

updated 3:23 p.m. ET Aug. 15, 2006

DETROIT - Ford Motor Co. said Tuesday it plans to trim the number of dealerships it has in 18 metropolitan areas across the country, blaming sliding car and truck sales for the decision.

Most of the metro areas are east of the Mississippi River, but the company would not identify exactly what markets would be targeted. Dealers were told of the effort at the company’s annual dealership meetings, which wrapped up last week in Las Vegas.

“If you think about where we were in terms of sales and market share and where we are, you quickly realize that in certain markets, we have more dealers than our market share can support profitably over time,” said company spokesman Jim Cain.

Ford has about 4,300 Ford and Lincoln-Mercury dealerships nationwide, and dealer profits have declined an average of 10 percent in the first half of 2006, the company has said.

Its market share has declined from around 26 percent in the early 1990s to 17 percent at the end of July.

Cain said Ford has no target number or timetable for the dealership reduction.

The consolidation would be done voluntarily through negotiations, with stronger dealerships buying out weaker ones, Cain said. Ford would not buy any dealerships, he said.

In some urban markets, Ford dealers compete against each other rather than other automotive brands, Cain said. Some of those dealerships aren’t profitable, he said.

“In these multipoint markets, that’s the toughest place to make money,” Cain said. “You have many more Ford dealers competing for limited market share.”

In the past, when a dealership would close, Ford would try to replace it, but now the company will review those decisions more closely, Cain said.

All Ford dealerships except for one in New York City are independently owned and franchised by the company, Cain said.

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