Ford Planning to Pull Out of U.S. Dealer Business

Ford Motor Co. said Tuesday that it is selling seven auto dealerships in Oklahoma and plans to pull out of the U.S. dealer business altogether to appease dealers upset about competing against the auto maker.

Ford said it has agreed to sell all seven of its dealerships in Tulsa, Okla., to UnitedAuto Group, the second-largest publicly traded U.S. auto dealer. Ford spokesman John Ochs said an additional 23 dealerships in New York, Oklahoma and Utah will be sold separately once buyers are found.

The dealerships were part of Ford’s controversial auto collection experiment in which the company sought to consolidate most or all dealerships in a market and own them jointly with dealers.

Detroit’s traditional Big Three auto makers have worked for the last several years to consolidate their U.S. dealer networks to cut distribution costs and better control how their brands are sold. Distribution expenses make up about 30% of the cost of a car.

But efforts to buy dealerships have sparked protests from dealers, who see factory-owned stores as a threat. General Motors Corp. backed off plans to purchase as much as 10% of its dealers after a near-revolt. Those efforts also have been blocked by many states that bar auto makers from owning dealerships. Ford also had backed off its original plans to establish collections in many cities, but had said it will hold on to the current collections and use them to test new sales techniques. However, the auto maker sold its interest in a dealership group in San Diego in December.

Jerry Reynolds, a Texas Ford dealer and head of the national Ford dealer council, said Ford Chief Executive Jacques Nasser told dealers in a satellite broadcast Tuesday that the company had learned a lesson about “how tough it is to make it in the retail world and how good a job we do.”

Ochs said Ford, which is spending $3 billion to recall Firestone tires on its pickups and sport-utility vehicles, hopes to find buyers for the dealerships within a few months. He said all of the dealerships are profitable. Detroit-based UnitedAuto operates 123 franchises in 19 states, Puerto Rico and Brazil.

Ford shares fell 29 cents to close at $24.79 on the New York Stock Exchange.