A website development agreement between Ford and the privately owned computer software giant Trilogy Inc. has given a shot in the arm to a controversial e-commerce auto sales project.
That is the ongoing dealer-purchase initiative of CarOrder.com, a subsidiary of Trilogy and the recipient of $100 million from its parent to shop for and buy dealerships.
Carorder's zealous president, 23-year-old Brian Stafford, says he has 10 purchase agreements from dealer principals awaiting approval from automakers, plus 40 more letters of intent to sell franchises to the Austin, TX-based auto sales Web site.
"The principals we have negotiated with all plan to stay on at their dealerships," Mr. Stafford tells Ward's Dealer Business. "That should calm automakers concerned about selling to website developers like ourselves without back-grounds in auto retail, as well as state franchise boards."
The Ford-Trilogy partnership, under which the Austin company will help develop dealer websites that can be linked to Ford's own brand sites, also will allow Trilogy to oversee a used-vehicle showroom online that the automaker is launching in states where franchise laws permit.
Ironically, the Texas Motor Vehicle Commission has challenged the Ford concept as a violation of the state law's factory-ownership ban. Ford has taken this issue to court, seeking to retain the right to merchandise off-lease vehicles in the state where Trilogy and CarOrder are headquartered.
Texas also is a battleground for an alternative approach towards distribution being pursued by another auto sales website, Carsdirect.com.
Rather than buy dealers, Carsdirect is asking Arizona, California, Nebraska and Texas legislatures to amend their franchise laws so that Internet companies can obtain auto sales licenses.
Currently, Carsdirect completes the vehicle purchase process by buying vehicles from dealers and delivering them to purchasers, acting as an on-line broker.
States that ban brokering, such as Arkansas and Texas, frown on Carsdirect-type operations, and NADA and state dealer associations have steadfastly supported franchise laws where vehicles are delivered only at established dealerships with sales and service facilities.
With "angels" like computer giant Michael Dell, Goldman Sachs and software producer Oracle Corp., Culver City, CA-based Carsdirect is reportedly planning a constitutional challenge if state vehicle boards withhold dealer licenses or state legislatures amend their franchise laws to prohibit internet companies from being vehicle sellers.
"Dealers fighting Internet sales companies are living in the past," says Dave Thomas, a Honda-Toyota-Lincoln Mercury-Mazda dealer in Oregon. "More and more people buy on the 'net and will never walk into a showroom. Internet is their way of life."
Brian P. Kelley, president of Ford's ConsumerConnect unit and overseer of Ford's Internet ventures, calls the Trilogy linkup a step towards "world-class websites."