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Hard times hitting independent car dealers

The current credit freeze and rocky economy is hitting home for some local independent car dealers and causing some of the larger car dealers to tighten up on expenses.

In 2007, Phillips Automotive on Riverside Drive was doing well. It sold 732 cars – an average of 61 cars a month, Trey Phillips said. But beginning last fall, the company’s line of credit began drying up.

Car dealers do business by borrowing money to buy cars, then when they sell a car they pay back the bank and keep the profit, he said.

“Starting in September 2008, those lines of credit were cut by 50 percent, then 30 days after that (the credit) was cut further,” said Phillips, who opened the car dealership in 2004.

Another thing that happened is that credit rules tightened up and less people were able to get financing, he said. Also, some of the banks that received bailout money intended to help the credit freeze, actually went out of the car- and mortgage-lending business.

“It really hurt the independent car dealers,” he said.

By the end of December, Phillips had to close his business in Macon as well as his Chevrolet dealership in Reynolds, and about 30 employees lost their jobs.

Phillips said he was fortunate to get a job as general manager of Butler Max and Butler Volkswagen on Eisenhower Parkway.

Butler Max is the used car division of the Butler automotive group.

One Macon independent used car dealer doing OK right now is J. Franklin Auto Sales, and what’s helping them is in-house financing, general manager Ray Hallman said.

“We keep 154-162 cars on the lot all the time,” he said. “Sales are good.”

The DriveSmart store at Riverside Drive and Wimbish Road only had five cars on its lot Monday afternoon, but general manager Ray Jones declined to say whether the company was going out of business and referred calls to the owner, who did not respond by late Monday.

DriveSmart has rented the property from Jackson Automotive since 2006. Jimmy Jackson, owner of Jackson Automotive, said DriveSmart was shutting down and that its lease expires at the end of the month.

“I don’t know what will happened to that property,” Jackson said. “I don’t know if we will rent it to somebody else.”

Jackson Automotive will continue to maintain its body shop in the rear of the property, Jackson said.

SMALL USED CAR DEALERS NOT ALONE

Riverside Ford, in an effort to cut expenses, has moved its rental car and truck business from its spot across Riverside Drive from the dealership, to inside the service department, said CEO/general manager Terry Tiller.

Business has slowed and other measures, such as changing phone systems and adjusting health care costs, have been taken to cut expenses, Tiller said. Also they are not refilling positions when someone leaves.

“It could be a lot better, but we are not struggling,” he said. “When the turn comes, we will be ready. We’ll be here when the smoke clears.”

Leven Holliman, general sales manager for Butler Toyota, said he’s thankful to have a Toyota dealership, because the Toyota brand has fared better than some.

“I’m not saying we don’t get affected here ... but we are trending right now to have our all time biggest used car month,” Holliman said.

However, the company has downsized its employees less than 10 percent over the past five months, most of that in support staff, he said.

“We just make ourselves a little bit leaner,” he said.

To contact writer Linda S. Morris, call 744-4223.

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