A courtroom battle that could reach the U.S. Supreme Court is shaping up over Ford's Blue Oval certification program.
Ford President and CEO Jacques A. Nasser, responding to a suit filed by five dealers in U.S. District Court, Newark, NJ, called Blue Oval a dealership program the company "can't live without" because of its customer-satisfaction merits.
He warns, "Anyone who is going to hide behind legal fences better have an exit strategy because it won't work long term.
"For the best dealers, they can see it as an opportunity. For those dealers who see it as a threat, then maybe there is a threat in it for them."
The company's formal answer to a 38-page bill of complaint filed by five Ford dealer plaintiffs was due in court Jan. 19.
The complaint seeks an injunction to halt Blue Oval's implementation. Opponents say it violates state franchise laws, the federal dealer-day-in-court statute in the antitrust law and the Federal Robinson-Patman Act outlawing "unequal" pricing.
Specific charges against Blue Oval include the dealership certification bonus that many smaller-volume operators heatedly oppose. It's fostered a movement among state dealer associations to legally support the plaintiffs.
The plaintiffs say Blue Oval, by design, prevents many dealers from qualifying for the program.
The Ford National Dealer Council unanimously endorsed the company's position on Blue Oval, including its 1.25%-of-vehicle-MSRP "bonus" to certified dealers.
The council's position is why NADA refuses to side formally with the plaintiffs in the matter, says Lou Kairys, chairman of NADA's industry relations committee.
Council Chairman Jerry Reynolds says more than 1,000 Ford dealers have been certified for Blue Oval. He calls the need for a law suit regrettable.
However, NADA Chairman Harold B. Wells assails the multi-tier pricing clause. He's part of a fervent opposition campaign launched by the North Carolina Automobile Dealers Association. Mr. Wells is a Chrysler and GM dealer.
With NADA in the wings, Iowa Automobile Dealers Association's general counsel, Martha Martell, has taken up the organizing of state associations on behalf of the plaintiffs' side.
The Ford Dealers Alliance laid the groundwork for the suit. The alliance is asking dealers in all brands to financially back the legal action. Up to $1.5 million is sought.
Michelle Van Viorst, general manager of the alliance, says the battle against Blue Oval "threatens dealers in all brands if the pricing tier concept is upheld."
The plaintiff dealers, all members of the alliance, decline comment on the advice of their attorneys.
The plaintiffs are: Timothy Guinee, president, Danvers Motor Co., Danvers, MA; Robert Chambers, president, Bob Chambers Ford d/b/a Augusta Ford, Augusta, ME; Fredric J. Familio, president, Concord Ford-Lincoln Mercury, Newark, NY; Lawrence T. Fette, vice president, Fette Ford, Clifton, NJ; and Robert Creedon, president, Senator Ford, Sacramento, CA.
Their court petition says, "Dealers who do not or cannot conform to the Blue Oval program...will suffer the severe financial penalty in the higher cost of their vehicle orders, the competitive disadvantages and discrimination of the three-tier pricing, the unavailability of certain ancillary benefits and promotional allowances made available to Ford certified dealers, and the incalculable loss of reputation and goodwill as non-Blue Oval certified dealers..."as a practical matter, certification is not reasonably available to the whole dealer body and there would always be a significant uncertified minority of dealers."
Mr. Reynolds says BMW has a comparable award plan that pays dealers up to 5% of MSRP, or about $1,700 per vehicle. The Blue Oval's bonus would average about $250 per vehicle, he says.