DETROIT—Ford Motor Co.'s already disgruntled dealer base is none too happy that the auto maker has invested in an auto-repair service that may compete with them.
Critical dealers view Ford's investment in JoeAuto Inc. as direct competition with dealership service operations. Customers schedule service appointments on the Internet at JoeAuto.com repair shops—not franchised auto dealerships.
JoeAuto.com is a startup operation, and Ford's investment—a large share of a $13.5 million finance deal—is considered meager. But dealers are objecting to the principle.
"The thing that angers me is that they are going to compete with us," said Jerry Reynolds, chairman of the Ford Division National Dealer Council. "I will always adamantly oppose anything that could potentially take dollars away from dealers."
Ford said it invested in JoeAuto.com to gain an inside view of the company's Internet technology and customer handling.
"JoeAuto has a completely developed model for providing automotive maintenance and light-repair service appointments and customer follow-up online," said Jerree Martin, a Ford spokeswoman. Ford wants to learn how to create an Internet service system that can eventually be used by its dealers, she said.
For example, JoeAuto.com customers schedule appointments and pay online. Customers also may watch repairs being completed via Web cameras mounted in service bays. JoeAuto will pick up the vehicle, supply a loaner and drop off the vehicle when repairs are completed.
JoeAuto operates an eight-bay prototype shop in northwest Houston that opened in April 2000. A second 28-bay store is being built in midtown Houston and will open in June, said Lynn Graham, founder, president and CEO of the Houston-based company.
Ford's run-in with its dealers over JoeAuto is the latest event in a period of rocky relations.
Dealers still are smarting over the auto maker's aborted foray into store ownership via the Ford Retail Network. Tempers also rose when Ford, Lincoln and Mercury started a dealership certification program now being contested in court.
Ford Division ranked last in the most recent dealer attitude survey of the national Automobile Dealers Association.
Ford's Ms. Martin said Joe- Auto.com customers will be referred to Ford, Lincoln and Mercury dealerships for warranty and recall repairs, medium and heavy repairs, body shop repairs, parts sales and vehicle sales.
The dealer council's Mr. Reynolds acknowledged that JoeAuto has developed technology that could be a boon to dealers. For example, JoeAuto provides customers with e-mail updates on the progress of a repair and scheduled completion time.
But Ford should still have passed on the deal, he said. "Even if there is some gain, it is not worth risking dealer relations for it."
As part of the financing deal, Ford will take one seat on JoeAuto's board.
Dealers learned of Ford's investment in JoeAuto when the privately held firm confirmed in February that it had locked in financing from Ford, CCG Venture and other investors. Ms. Martin said Ford completed the transaction late last year.
Neither Ford nor JoeAuto would disclose Ford's investment or percentage of ownership. However, in a Feb. 26 story in Tire Business, Mr. Graham said Ford gained a major piece—but not majority ownership—in the company, and described JoeAuto's relationship with the car maker as "collaborative."
He said JoeAuto is lining up more strategic investors and hopes a second phase of fund raising will bring in $25 million by June.