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Letter to the Editor

Ford Exiting Auto Dealership Business; Sells Oklahoma Holdings to UnitedAuto Group

DETROIT -- Ford Motor Co.has announced 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 automaker.

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

Ochs said the company decided to sell after a series of recent meetings between dealers and Ford Chief Executive Officer Jacques Nasser where dealers called for the sale.

"Dealer relations are a priority," Ochs said.

The dealerships were part of Ford's controversial Auto Collection experiment, where Ford consolidated most or all dealerships in a market and owned them jointly with dealers.

Detroit's traditional Big 3 automakers 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 percent of the cost of a car.

But efforts to buy up dealerships have sparked howls of protest from dealers, who see factory-owned stores as a threat. General Motors Corp. backed off plans to purchase up to 10 percent of its dealers after a near revolt by dealers. Those efforts have also been blocked by many states that bar automakers from owning dealerships.

Ford had also backed off its original plans to establish collections in many cities, but had also said it would hold onto the current collections and use them as test beds for new sales techniques.

The automaker sold its interest in a dealership group in San Diego, California, in December of last year, however.

The Tulsa collection was the first, formed by Ford in 1998 from eight stores that sold about 20,000 vehicles a year. Ford bought a majority stake in the collection from the dealers in 1999.

Ochs said Ford hoped to find buyers for the other dealerships within a few months. He said all of the dealerships were profitable.

UnitedAuto Group, Inc.,a member of the FORTUNE 500, signed a letter of intent to purchase the Tulsa Auto Collection.

Jim Evans, the dealer operator who currently manages the Tulsa Auto Collection will participate in the acquisition with the company, and continue to run the operation for UnitedAuto.

The Tulsa Auto Collection consists of seven dealerships representing the Ford, Lincoln/Mercury, Jaguar and Mazda brands. In addition, the company operates two Quality Car Care service centers and two used car facilities. The completion of the transaction is subject to customary conditions.

Roger Penske, UnitedAuto Chairman, stated, "We are excited about the opportunity to partner with Jim Evans to acquire these dealerships. Tulsa is a strong market and Ford has built a solid, customer-focused organization to represent its diversified portfolio of brands. UnitedAuto will be well positioned to capitalize on the momentum Ford has created in the Tulsa market, and we are pleased that our partners at Ford Motor Company chose UnitedAuto Group for this unique opportunity."

UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 123 franchises in 19 states, Puerto Rico and Brazil. UnitedAuto dealerships sell new and used vehicles, and market a complete line of after-market automotive products and services.

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