An unusual “shootout” is taking shape in California over Ford Motor Co.'s refusal to allow publicly owned Asbury Automotive Group to buy one of its San Diego stores.
Rebuffed multi-franchise dealer Robert H. Baker has taken the matter to the powerful California New Motor Vehicle Board (NVMB). The board, three of whose members are franchised dealers, has slated a March hearing in Sacramento.
The case is called “University Ford dba Bob Baker Ford vs. Ford Motor Company.” But the third party in the dispute is also a central player — Asbury Automotive Group.
Based in Stamford, CT, Asbury thought it was acquiring Bob Baker Ford with the entire Baker group last summer for $88 million only to be denied the Ford store by the auto maker.
In a letter to Asbury, Ford Div. General Sales Manager Thomas J. Gorman says only three of Asbury's 10 Ford dealerships “met our criteria to acquire additional franchises during 2002.”
Gorman says market shares at Asbury's seven other Ford stores were below regional averages, while customer satisfaction scores trailed group averages.
He asserts market share losses had occurred at “nearly every dealership since the date that Asbury purchased the dealerships.”
The Baker Group's franchises are distributed among six dealerships and include Toyota, Lexus, Chevrolet, Volkswagen, Chrysler, Jeep, Mitsubishi and Subaru.
According to the petition, all other franchise transfers had been approved by relevant manufacturers except Toyota and Lexus. Asbury expects Toyota and Lexus to approve. The petition says Ford's position could jeopardize the entire group sale.
Asbury, whose chairman, Tom Gibson, ironically worked for Ford in marketing and sales, has 93 dealerships in eight metro hubs and had 2001 revenues of $4.5 billion. It was one of the last of the big megadealers to go public.
The Baker Group ranks 55th on the latest Ward's Dealer Business Megadealer 100, with annual revenues of $492 million. That's an increase from $445 million the year before. Baker's Ford franchise was awarded in 1979.
The Asbury dealerships singled out by Ford as under-performers in market share objectives are: Crown Ford, Fayetteville, NC; Northpoint Ford, North Little Rock, AR; Gray-Daniels Ford, Jackson, MS; McLarty Ford, Texarkana, TX; Deland Ford, Orange City, FL; Thomason Ford, Gladstone, OR; and Dee Thomason Ford, Beaverton, OR.
Gorman says Ford, before considering the Asbury acquisition of further Ford-brand stores, will wait a year to see if performance levels improve.
The three California vehicle board members who are dealers include two from Ford stores. They are: David W. Wilson, board vice-president and owner of Ford of Orange and Alan J. Skobin, of Galpin Ford in North Hills.
Robert V. Branzuela, a Mitsubishi dealer in San Mateo, is the third dealer on the 7-member board. Dealer members are recused from decisions on issues such as those between Baker and Ford.
Baker says Ford's veto of the purchase violates a clause of the California franchise law that says “no dealership can be sold without the consent of the manufacturer except that the consent shall not be unreasonably withheld.”
Baker's attorney, Mike Sieving, says, “We contend Ford is acting unreasonably in this matter.”
He tells Ward's, “Asbury is a well-funded and established auto retail group with 93 dealerships and 130 franchises. The fact that other Ford dealerships owned by Asbury did not perform up to Ford's expectations is totally irrelevant as far as Bob Baker Ford is concerned in the pending purchase.”
Michelle VanViorst, manager of the Ford Dealers Alliance, says the 1,700-member dealer rights group has seen many franchise transfer veto disputes in its 33 year history.
But this is the first one involving a publicly owned mega-dealership, she adds.