Ford has a dealer development program aimed at helping those who lack up-front capital open a dealership. The dealer pays Ford back with profits from the business, and slowly buys out Ford's stake. There are 81 dealers in the program now, 62 of which are minorities who the program was originally intended to aid, and Ford has offered to buy all of them out by returning the dealer's full investment.Some dealers say Ford is trying to shed the minority-owned franchises, and Ford denies the accusation, saying that it is simply trying to let struggling dealers exit the business without losing everything, and that it wants to get its dealer organization in line with its economic reality. To be fair, the offer has been extended to every dealer in the program, some of which even are profitable. As well, for dealers who rely solely on the dealership for income, there's a chance Ford will give them an additional $100,000.
No matter what's the real impetus, at least Ford is trying to make an offer that isn't pennies on the dollar. Said Hispanic dealers' alliance chairman and dealership owner Fernando Varela, "In tough market conditions (when) you're not making any money, they're offering you something. Other manufacturers let you walk off, and you lose your investment." Ford has given dealers until April 1 to decide on the buyout; dealers are asking to have until June 1 to make the decision.
[Source: Automotive News, sub req'd]
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Reader Comments (Page 1 of 1)
geo.stewart @ Mar 10th 2008 4:10PM
Ford is trying to trim the excess dealers it has, and these are the low-hanging fruit, if you will. Nothing nefarious. and nothing saying they have to close shop.
but its a nice out if you realized you are in over your head.
I think you could give everything you have away and someone would come up with a way to spin it that you screwed them over.
Throwback @ Mar 10th 2008 4:11PM
This seems like a fair offer. How many loss making businesses get this kind of offer?
nuclearchip@aol.com @ Mar 10th 2008 4:29PM
Unbelievable....... Ford offers you a buyout and they "cry minority"? Get real! Ford needs to down size it's network of dealers......as did GM and now Chrysler. What a crappy thing to imply that it is anything more! Maybe Ford should not offer it and let the BANK come in a take it when you little bitches fold up and close your doors! idiots!!!!!
UltimoDragon @ Mar 11th 2008 2:28PM
The program was enacted by Ford to encourage more minority dealer ownership in the first place, which it did. So it's no surprise that when FoMoCo wants to pull back on the program, it'd stand to affect minority dealers the most.
Nobody cried 'race' but you in your less-than-informed post.
Whiplash @ Mar 10th 2008 4:36PM
What a sweet deal. Basically these guys got to play businessman for a while and then walk off with nothing lost and experience gained. What are they complaining about again?
Tourian @ Mar 10th 2008 5:28PM
Some may argue that the dealers (ie market, location, oversaturation) these minority owners were offered to begin with were losing propositions from the jump and that being offered an early out so they don't impede the profitability of more established non-minority owned dealers is just adding insult to injury. With that being said, even if they all accepted, cutting 81 dealers is probably nowhere near enough and Ford will be trying to shut down non minority owned dealers also.
Sandy @ Mar 10th 2008 6:53PM
You cn bet that the few dealers that want to hang on for a while ... wish to because they also borrowed from banks and/or lending companies, and they are not so forgiving. So, they wanna try & pay down what they owe to these private commercial lenders, before giving it all back to Ford.
Believe me, I was in the business for many many years. The huge investment (multi-millions) is only finally absorbed after over 25 years in business, in the same location. (If you are good and also lucky.)
Percentage-wise, you can make more money opening a medium sized liquor store !!
UltimoDragon @ Mar 11th 2008 2:44PM
I remember a Nightline report at least ten years ago that profiled an African-American dealer in a similar program done by GM.
After jumping through all the necessary hoops, they placed his store (he didn't have a choice) into a small midwest community. I think a day or a few days after his dealership finally opened, it was announced that the plant/factory that provided most of the area's jobs would close.
I don't know if GM or Ford ever implemented changes to their capital lending programs, but that story certainly didn't put it in a good light.
jw @ Mar 10th 2008 7:38PM
THESE MINORITIES NEVER SHOULD HAVE GOTTON A POINT IN THE 1ST PLACE...IT'S ALL A GAME TO KEEP JESSE JACKSON AND AL SHARPTON OF FORDS BACK...75% OF THESE STORES NEVER MAKE IT AND MOST OF THEM JUST STEAL WHAT THEY CAN FROM FORD ANYWAY...IF THEY DON'T TAKE THE DEAL THEY WILL BE GONE IN 6 MONTHS...
Mal Fuller @ Mar 10th 2008 8:04PM
Ford's come a long way I guess, from the days they left all their brand new Edsel dealers twisting in the wind.
adrian @ Mar 10th 2008 8:32PM
There's no room for complaint. Ford could let those dealers hang, if they want to. They better take the money, and shut up.
UltimoDragon @ Mar 11th 2008 2:46PM
As Sandy pointed out, it might not be as simple as taking Ford's buyback offer and starting clean.
Randy @ Mar 10th 2008 10:43PM
As a business owner that had a franchise at one point, Ford's offer is a VERY good thing for anyone in a bad spell! I was sleepless many nights until I sold my franchise! Messy! Ford should be awarded a medal of honor for the offer alone!