Ford Joins With 4,200 Dealers to Form Online Sales Venture

In a bid to extend control of its vehicle sales into the fast-growing Internet retail channel, Ford Motor Co. said Friday that it is forming an e-commerce enterprise with its 4,200 dealers so customers can buy Ford cars and trucks online.

It is the first move by one of the Big Three U.S. auto makers to sell new vehicles directly over the Web, a sensitive area because state franchise laws generally require that new cars be sold only through dealerships.

Ford, General Motors Corp. and DaimlerChrysler warned their U.S. dealers earlier this year not to do business with Internet brokers who sell cars directly to buyers. By structuring FordDirect so that every sale goes through a dealer, Ford hopes to take advantage of the popularity of shopping on the Web.

GM is closing in on such a project itself, saying last week that it is considering a similar venture with its dealers, with an announcement expected next month.

With FordDirect, buyers can choose, configure, price and finance their purchases at any time of day, seven days a week. Transactions will be completed by local Ford dealers selected by customers, which will provide service for the vehicles after purchase.

Sales will begin on FordDirect.com (https://www.forddirect.com) in California next month and spread nationwide next year.

Recognizing that the Internet represents a vast opportunity for retail sales, auto makers have been seeking the best way to establish their presence online to fend off ever-increasing independent auto retail Web sites, which refer buyers to auto dealerships.

This week Amazon.com, the Internet book retailer that has branched out to sell electronics, toys, kitchenware and lawn tools, said it will also sell new cars on the Internet. Amazon.com is partnering with e-commerce firm Greenlight.com to provide no-haggle prices for new cars of almost any make, also through local dealers.

Prices on FordDirect will vary from region to region depending on local market prices. “We wouldn’t expect someone to pay the same price for four-wheel drive in Detroit, where there’s a lot of snow, as in Texas,” said Jerry Reynolds, chairman of the national Ford Dealer Council. “It wouldn’t be fair.”

Ford says FordDirect differs from independent car retailing sites because it offers customer support during and after the sale. Customers will be able to choose the Ford dealer with which they want to do business.

“FordDirect will address the selection and service shortcomings of today’s existing online auto sites by bringing superior geographic coverage, accurate information and the broadest range of services directly to consumers at the point of sale,” Reynolds said.

“This is an unprecedented partnership between an automotive dealer body and a manufacturer,” Reynolds said. “No other auto maker can claim this level of cooperation with their dealers. We are breaking through the channel conflict that is sometimes caused by the Internet and giving our customers a great new experience.”

Ford dealers approached the auto maker with the idea of building a direct-purchase Web site, said Jim O’Connor, president of Ford Division. Customers can purchase new vehicles “knowing that the entire experience is backed by Ford and our dealer partners,” O’Connor said.

FordDirect will be 80% owned by participating Ford dealers. Ford will also invest in it, but officials would not give the amounts.

Sales will be of Ford brand cars initially, but other brands owned or controlled by Ford--Volvo, Mazda, Jaguar, Land Rover--could join, O’Connor said.

FordDirect is rolling out in California first because of the population concentration and heavy automobile use.

Although this is Ford’s first e-business venture with its dealers, the auto maker has already made a foray into retail Web sales by taking a 25% stake in Microsoft’s online auto retail service CarPoint.

About 40% of all retail car buyers went onto the Internet to research models before making their purchases last year, although more than 97% still made their purchases at a dealership, according to industry estimates.

On Friday, Ford closed down 13 cents at $27.63 on the New York Stock Exchange.