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Friday, Dec. 12, 2008

Local car dealers feeling pinch

The proposed $14 billion government rescue plan might not have solved all the automobile industry’s problems, but it could have jump-started lagging confidence among many consumers who — for now, at least — are not buying, area car dealers say.

“A lot of people are just on hold, waiting to see what will happen,” said Kevin Franchi, general sales manager for Youmans Chevrolet in Macon.

Talks on the bailout collapsed in the Senate on Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts. It wasn’t immediately clear, however, how the auto aid measure might be resurrected.

The plan would have provided immediate loans to cash-strapped General Motors and Chrysler, while offering a line of credit to Ford.

“I can’t see where it would hurt,” said Mark Goodman, sales manager at Jerry Barker Chevrolet in Byron. “If it avoids the alternative, (an automaker) filing for bankruptcy, it will help. Customers have said they aren’t going to want to buy from a bankrupt company.”

Car dealers say they’ve seen sales slump since midyear, and Goodman blames a “multitude of problems,” from this summer’s skyrocketing gas prices to the Wall Street meltdown and ensuing credit crunch. Several local General Motors dealers reported decreases in sales of more than 40 percent since midyear.

“People are just putting off big-ticket purchases right now,” said Franchi. “Banks are tightening up some on how much they loan individuals and for how long, but we’re providing loans. We always have. People are just scared to borrow money right now.”

GM executives have said that the company could file for bankruptcy by the end of the year without help from the government. Eddie Wiggins, owner of Eddie Wiggins Buick-Pontiac-GMC, said he was asked this past weekend if GM is going under.

“I’m convinced they’re not going out of business, but if I put myself in their shoes, I might be asking the same question,” he said.

Wiggins conceded that times have been tough. Sales at the dealership have dropped by about 50 percent since midyear, he said, and the slump has led to a “single digits” reduction in personnel.

“It’s been mostly voluntary ... sales people who think the grass might be greener,” Wiggins said. “I’ve got 50 employees right here at Christmas. We’ve got people who have been here a long time. It’s hard to be able to accept those losses.”

The summer fuel-price spike contributed to the closing of the Jerry Barker Hummer dealership. The franchise was sold and the lot in Byron closed in October, Goodman said. Dealerships have survived high gas prices before, he said, but the credit crunch and economic downturn that followed have made for a tough recovery.

“That has really taken a toll on the auto industry, and it was really out of their control,” said Franchi.

Even the megadealerships haven’t been immune. In September, the Columbus-based Bill Heard Chevrolet chain, which had billed itself as the “world’s largest Chevy dealer,” filed for bankruptcy and abruptly closed its doors.

With sales down, more car owners are holding onto their vehicles longer. As a result, some dealers are seeing increased business in their service departments, which at least in part has lessened the impact of lackluster sales. Goodman said Jerry Barker Chevrolet in Byron has picked up some customers from Bill Heard and another closed dealership in Reynolds.

“There’s always a positive side to everything negative,” he said. “The positive side to all this is our business in parts and service did increase. People are servicing their cars when they might normally trade them.”

Terry Tiller, CEO and general manager of Riverside Ford-Lincoln-Mercury in Macon, said sales at the dealership have dropped, but only by about 25 percent.

“We’re making it up in the parts department, the service department and the body shop,” Tiller said.

Riverside, which employs 130 people, has not laid off anyone, but Tiller said he’s had to shift personnel and rework schedules. He even installed a new, more efficient phone system to save money.

“I’m working the expenses like a short-haired dog over here,” he said.

Riverside has been in business 40 years and has a “loyal customer base,” which has helped, Tiller said.

“It’s not really as bleak as you get from the media. ... Ford’s got a good product. We’ll be fine when all this is over.”

Tiller said Ford has enough liquidity, or cash, to make it through 2009 and joined Chrysler and GM in the appeal to Congress mostly out of concern that should one of the other companies fail, the vendor chain could be interrupted and cause a “domino effect.” For instance, he said, the companies share a common seat manufacturer.

“Ford’s in a lot better shape,” Tiller said. “If things get worse, Ford wants to be able to go somewhere to get some money.”

Youmans’ Franchi said GM has positioned itself well for the future. It outsold Toyota worldwide and in the United States last year, he said, and it has 18 vehicles on the market that get more than 30 miles per gallon, offers hybrids and is scheduled to introduce the electric-powered Chevrolet Volt in 2009.

“GM has really worked hard to, I don’t want to say ‘go green,’ but certainly toward that end,” Franchi said.

Also, he said, the automaker has cut payroll by about 45 percent since 2000 and is set to pay billions of dollars less in health-care benefits after 2010.

Still, a loan package, or bailout as some call it, is crucial to getting American automakers — and perhaps the economy — through the recession, local dealers said.

“These companies employ one out of every 10 people in America,” said Franchi. “It has a profound impact on everyone, not just the automobile industry. We want them to get healthy as possible as quickly as possible.”

Part of the collapsed proposal called for the appointment of a “car czar” to oversee restructuring of the so-called Big Three. Wiggins said he understands the push for restrictions and governmental oversight in whatever sort of aid package is finally approved.

“Put some safeguards on it,” he said. “I can’t imagine Congress wanting to be in the automobile business, but they don’t want to deal with the rolls of unemployment and other problems that might happen. ... People who are negative about this sort of thing are going to only help the foreign automakers survive.”

Bobby Cramer, operations manager at Five Star Dodge-Chrysler-Jeep-Hyundai-Mazda in Macon, said that even though sales are down some, “business has been good” at all the company’s dealerships, including its Chevy, Cadillac and Nissan lots in Warner Robins.

“Right now is a great time to buy a car,” Cramer said. “We’ve got all kinds of incentives, and the money is there.”

Jerry Barker’s Goodman also said he’s encouraged by numbers that have trended upward recently.

“It’s not a big jump,” he said, “but maybe we’ve hit the bottom and are heading up again.”

The Associated Press contributed to this report. To contact writer Rodney Manley, call 744-4623.