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Ford Motor Co. of Canada Ltd. has changed its stand on ownership of its dealerships by publicly traded companies, saying it will now allow such firms to acquire its stores – a move that opens its outlets to potential purchase by AutoCanada Inc.

The reversal in Ford Canada’s policy was outlined in a memorandum to dealers by Tim Witt, Ford Canada’s vice-president of sales.

There are now only two large auto makers in Canada that prevent publicly traded companies from owning their dealerships: Honda Canada Inc. and Toyota Canada Inc.

Ford Canada’s parent, Ford Motor Co., allows AutoNation Inc., Lithia Motors Inc., Penske Automotive Group and other publicly traded auto retail giants to own its stores, as do the U.S. sales divisions of Honda Motor Co. Ltd. and Toyota Motor Corp.

The auto maker’s decision creates a big new potential market for Edmonton-based AutoCanada, Canada’s largest publicly traded auto group, which operates 68 dealerships with 27 different brands. There are about 420 Ford dealerships in Canada.

AutoCanada recently acquired an Illinois-based dealership group that includes an outlet of Ford’s Lincoln luxury brand. That deal will soak up about $110-million of $350-million AutoCanada set aside for acquisitions from a $1.08-billion capital raise earlier this year.

AutoCanada’s stores have been heavily weighted toward Fiat Chrysler Automobiles NV dealerships and focused geographically mainly on Western Canada, but that recent acquisition diversifies the company geographically and expands the range of auto makers whose vehicles it sells.

Certain conditions need to be met by publicly traded companies that want to operate Ford Canada stores, Mr. Witt said in the memo.

Any public company will be required to sign a five-year dealership sales and service agreement that sets out the terms under which permission to own a dealership will be granted, his memo said. If the terms are met, another five-year agreement may be granted.

Current Ford dealers in Canada operate under a perpetual sales and service agreement that remains in place as long as they meet sales, customer satisfaction and other requirements.

Ford Canada’s dealer council, known as the National Roundtable, approved the change, said Dan DeBoer, a partner in Parkway Ford Sales Ltd., in Waterloo, Ont., and head of the roundtable.

“What I think precipitated it [is] they were likely going to be challenged on it by either a Canadian or a U.S. group and my guess is that they probably didn’t think they could win the challenge,” Mr. DeBoer said on Thursday, adding that he is in favour of the change.

“With the cost of real estate and the profitability of quite a number of brands at [the dealership level], the ability of an individual to come in and buy a store from an existing dealer is getting reduced all the time.” Dealership groups have the capital needed to buy single-point stores or multiple stores, he said.

Ford Canada dealers, who spoke on the condition that they not be identified, said they believe the change in policy may have been sparked by a pending sale of a Canadian dealership.

Ford Canada spokesman Matt Drennan-Scace said the move was made after the company “reviewed the landscape of dealership ownership, both in North America and around the world, and looked at how that’s changed over time, with the increase in private group ownership and expansion in public ownership across the industry.”

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