Ford Dealers May Receive 6-Month Reprieve in New-Franchise Threat
Ford dealers in the San Fernando Valley apparently will get a second six-month reprieve from the threat of another Ford franchise opening in their midst.
John C. O’Donnell, district sales manager for Ford Motor Co. in Southern California and Southern Nevada, said the auto maker probably will put off plans to open another dealership in the area because early 1985 results show sales are sufficient at the Valley’s six existing Ford dealers.
“Right now, it seems they’ll meet the standards,” O’Donnell said. “If they’re meeting the standards, we don’t feel any need for a new dealer.”
Protests to State
The dealers filed protests with state regulators in January, 1984, after an announcement by Ford that it planned to add a franchise at 5201 Van Nuys Blvd. They argued that a seventh dealership in the area would siphon off customers, possibly driving some of the existing franchises out of business.
Ford has complained that it is not present along that stretch of Van Nuys Boulevard--where Oldsmobile, Pontiac, Nissan, Honda and others are represented--and, as a result, is excluded from a major market.
“Our tests show most people want to buy a car within five miles of where they live,” O’Donnell said. “Someone walking up and down Van Nuys Boulevard interested in buying a car isn’t being exposed to the Ford product.”
The success of dealers is being measured through registrations of new cars in different geographical areas--with registrations of Fords in the Valley, for instance, matched against those in a comparable area. There is a lag of several months between the time the cars are sold and the time that registration data can be compiled by Ford, and the results cited by O’Donnell reflected sales only to the end of April.
Test Agreed On
If the dealers are shown to have held their own through July 31--by matching or exceeding sales in surrounding areas--they will have passed the test set in February by the California New Motor Vehicle Board, the agency that regulates car dealerships. The test was a settlement of the 19-month dispute between the franchises and Ford.
If dealers pass the test, the opening of the new dealership will be deferred six more months. At that time, however, the dealers will again be subject to review, and the process can continue in six-month intervals until December, 1987.
If the dealers fail the test, O’Donnell said, Ford might again be interested in opening a franchise in Van Nuys, although the company does not have an individual or group lined up to start it. A party that had been interested in opening the dealership later lost interest, O’Donnell said.
The motor vehicle board is empowered to act as a go-between for dealers and domestic manufacturers by the Automobile Franchise Act of 1974. Similar legislation exists in 35 other states, according to Sam Jennings, executive officer for the board.
Besides protecting dealers from having their franchise agreements revoked without notice, the act is aimed at protecting them from excessive competition within a “relevant market area,” which is defined as being within 10 miles.
