Auto dealers scrambling for aid and survival

Wake up and good morning. Is this a small bright light in the dismal dark confronting auto dealerships? While Clearwater's AutoWay Dodge just sold its franchise to another dealer (Dayton Andrews) and Tampa's AutoWay Chevrolet closed (AutoWay is the local brand of AutoNation), and Tampa's Bob Wilson Dodge closed its doors, here comes a Texas dealer who somehow sees potential in buying the shuttered Bill Heard Chevrolet dealership in Plant City. According to the Lakeland Ledger, Grapevine,Texas-based Classic Automotive Group is acquiring the Bill Heard dealership for more than $15-million and plans to reopen late this year or early 2009, said Steve Hurley, who will be managing partner of the business. Columbus, Ga.-based Bill Heard Enterprises filed for bankruptcy protection in late September and closed all 13 of its dealerships nationwide, including the Plant City site and a Sanford location.

"We knew the Heard dealerships were in trouble long before they filed for bankruptcy," Hurley, the current general manager of Classic Chevrolet in Grapevine, told the Ledger, and added: "Even though it's a difficult economy, Florida's a desirable place. It's a Southern market and the economy will return. We see great potential."

Hurley's not blind to  Florida's economic woes, though he must see more possibilities than this observer. At 46, Hurley is moving back to Central Florida with his family to run the Plant City store. He grew up in Lakeland and graduated from Lakeland High in 1980.

Truly, he is bucking the odds. Nationwide, 590 new-car dealerships had closed through September, the National Automobile Dealers Association reports. Only 13 by then were in Florida, though more have joined the ranks. The NADA -- check out its market report for November -- predicted 700 closings by year-end -- similar to 1991, when there was a recession -- and another 900 next year. By comparison, 430 dealerships closed last year. There are about 21,000 new-car dealers.

If you haven't noticed, most dealerships closing their doors sell domestic autos, especially Chrysler and GM vehicles. And they're not taking this lying down. This week, 33 Chrysler dealers traveled to Washington to press for financial assistance for Detroit's Big Three. The group includes Chrysler's 18-member National Dealer Council. This is the week, of course, when Big Three executives make direct appeals for federal loans as Congress debates authorizing $25-billion for automakers from the $700-billion Wall Street rescue package. In return, the government would receive equity stakes in the automakers, which would agree to limit executive compensation and not use the loans to pay dividends.

According to the Detroit News, one of those Chrysler dealers lobbying this week is Florida's Jim Arrigo. (More details on Chrysler's own blog here.) He bought his Fort Lauderdale dealership in May when "everything was perfectly fine." A month later, everything wasn't.

"It can't get much worse," Arrigo, 49 and co-chairman of the Chrysler dealer council, told the Detroit newspaper. "The damage was already done. We're turning off the lights and making sure we're getting bang for our buck in advertising." Thankfully, Chrysler incentives are the best he has seen in 20 years, Arrigo said. Buyers can save $8,000, for example, on 2007 Dodge Rams. "It's helping us stay afloat," he said. But how long can Chrysler, which has been talking merger with GM amid growing fears of bankruptcy, continue to push incentives like that?

Greater Miami Chamber of Commerce CEO Barry Johnson recently made a direct appeal in the Miami Herald for federal support for the auto industry. Why? Because all of Florida would be hurt if things get worse in Detroit.

"The auto industry is a critical player in the local economies of communities in South Florida and across the state. Auto sales in Florida represent a key component of the state's revenue through sales taxes. Stagnant sales are a huge blow to our state budget, in addition to the impact on local dealers, employees and vendors. Some of our local dealers are up for sale; others are expected to close their doors in the coming months."

Where is this all heading? Probably to a slow death spiral for the domestic auto industry -- even if federal aid is delivered. There's something uniquely disturbing that the federal government can provide instant and multiple bailout funds topping $150-billion to one spendthrift insurance company -- AIG -- but can't seem to figure out how to justify a fraction of that sum to help a manufacturing industry that generates roughly one in ten jobs in the United States.

But then, everyone in charge of the bailout seems to have worked on Wall Street. So is this just a simple case of bailing out what (and who) you know?

-- Robert Trigaux, Times Business Columnist

Comments

[Bob H]

Maybe it's a case of what Barney Frank alluded to on NPR this morning...blue collar discrimination. It's okay to bail out all the white collar workers at AIG but leave the auto workers out in the cold?

[David]

Unfortunately, I think Barney Frank is particularly sensitive to the cold-shoulder being given to one of the Democrat Party's pet causes, unions.

I think that most people are fed up with the continued failings of the Big Three. There are a lot of accomplices that put the Big Three into this position -- lobbyists, unions, poor management, Michigan politicians as well as others -- and nobody seems to have any faith in the Big Three's ability to change their failing business model.

Let's face it -- the Big Three have been failing consistently since the early 70's. Poor build quality in the 70's, lack of investment in technology, failure to raise the CAFE when the handwriting was on the wall for gas prices are but some of the reasons.

Unfortunately for the dealer network, it's just a matter of thinning the herd. There are FAR too many dealerships in the country for the Big Three, so it is no surprise that the thinly-capitalized ones are going under.

Hopefully the morons in Washington handle this matter with the Big Three correctly. The fact that the pro-union Democrats are in control concerns me, since unions and bad union contracts are part of what got the Big Three in trouble in the first place.

[Al]

I have a theory...
Businesses fail because they don't provide a product or service that customers find value in.

If we bail out these retards, they're just going to push more high quantity, low quality, fuel-guzzling, crap-wagons in our face again.
Let them fail so that more innovative and customer-driven companies might flourish.

[bdiddy]

From everything i am hearing from people in the business, this is the right long term move. If they bk, it allows all the labor contracts to be renegotiated, etc. Sucks for everyone out of work.... Trust me.. I know all about.

[Edward Ringwald]

This is what happens when a locally owned auto dealership gets bought out by any of these national mega-dealerships such as AutoWay (which is owned by AutoNation in Ft. Lauderdale). Customer service goes from good to nonexistent. When I need to buy a car I only buy from a dealership that is locally owned and operated such as Lokey.

[Sweet Sue]

I heard this story on 970 WFLA radio over a week ago. Way to stay on top of the news SP Times and it's a re-print from the Lakeland Ledger. It's official
now, we can do without you.

[Tom]

I just get hopping mad when I see the CEO's of the big three flying to Washington on their private jets to beg for taxpayer money. So far, everyone is right... all they are going to do with $25 bn is blow it. Holiday bonuses are coming up for high level execs as auto workers get canned by the tens of thousands.

I have also heard from a lot of people who boots the buy-American schtick as the solution to the troubles being experienced today. "Buy 'Muhrican and we'll make these companies healthy again."

BS.

The US automakers have been down on their knees before and needed federal assistance to keep the doors open. This is when they held over 75 - 80% of the market. How did they respond? Well, Chrysler released the K-car on the masses... the car that self-destructed after 60K miles.

Then, even though we had huge oil issues in the 70's, they saw fit to develop and promote the gas guzzling SUV. And, they had the cajones to tell Suzy Homemaker that if she didn't bring little Johnny and Suzy to soccer practice in the ultra-huge, high-torque, V-8 four wheel drive land yacht, she was being a bad mom for putting her kids 'in danger on the roads.' What foresight!

The Buy 'Muhrican crowd also squalls about sending our money to foreign countries... buy 'Muhrican and keep the money in country.

OK, can you explain to me why most American sold Toyotas are built in places like Georgetown KY, Huntsville AL, Princeton IN, San Antonio TX, Buffalo WV and soon in Blue Springs MS...

While GM builds a whole bunch of its American cars in places like Ramos Arizpe, Coahuila, México; Silao, Guanajuato, Mexico; San Luis Potosí , San Luis Potosí, Mexico; Toluca, Mexico State, Mexico; and Oshawa, Ontario, Canada.

I bet you won't see too many Union card holding 'Muhricans building stuff there...

I say let 'em go to Chapter 11 and totally reorganize. Completely. Boot their entire executive staff, pare their operations down, move production back to the US, renegotiate the contract with the UAW to arrive at a realistic contract, up the quality, find new power sources and listen to the consumers.

[zinger]

Let them file for reorganization through Chapter 11, this is capitalism right, the strong survive and the weak go out of business !!!!!!

[Unhappy consumer]

On 12 Dec 2008, I called Arrigo Dodge in Palm Beach because they were advertising the exact car I wanted. Since I would be traveling from Kendall, I wanted to be precise in my expectations, before driving up there. So, I worked the numbers with the salesman over the phone, including a clear and much repeated absolute "out the door" price.

They would not budge from MSRP on the phone, but I decided to drive up and buy the car anyway, figuring it was the exact car I wanted, and it would be my little way of 'boosting' the terrible economy.

Once I arrived at the lot, with cash in hand, the salesman did the "let me get my manager" dance, and ultimately, tried to add a previously undisclosed $799 "dealer fee", plus hundreds more in additional charges outside of the required tax, title, license, that we had agreed to on the phone, bringing the price far beyond MSRP we had agreed to. These were not in options or services, but simply what is called ADP - "Additional Dealer Profit"

The 'manager' then lied about the invoice pricing and claimed it was thousands above the numbers available on Dodge's own website, and he was making 'practically nothing' on the deal, even at full MSRP and with these outrageous add-on fees! It was clear that they figured that since I was precise in what I wanted, and having seen the car and driven that far, I would just cave in on the extra charges that added NO value to me. They were wrong.

In short, they acted like the slime balls that got them into this mess, and I would not be willing to throw one dime at either the dealers, or the US auto companies to bail either of them out. They deserve what is about to happen to them, and should have seen it coming long ago.

Shame on you, Arrigo Dodge. Shame. I won't shed a single tear at your much deserved demise.

[Rich get richer!]

March 24, 2007 Circulation: 6,948
rbb Public Relations
A Day for Nautical Hooky
Sun shines on buyers and browsers alike as boat builders report brisk interest from mostly local owners
while bracing for out-of-town visitors over weekend.
By STEPHANIE MURPHY
Daily News Business and Real Estate Writer
Saturday, March 24, 2007
WEST PALM BEACH — Dodge Chrysler Jeep mega-dealer Jim Arrigo was like a kid skipping school Friday afternoon,
admiring dozens of Horizon yachts on the floating docks at the Palm Beach Boat Show and visiting the Gilman Yachts
display.
He said he felt akin to the owner of a new convertible who visits the showroom over and over until he knows the car has
been shipped: Arrigo's new custom 96-foot yacht is a week away from leaving the shipyard in Kaohsiung, Taiwan.
"This is the first wide-body raised-pilothouse ever built by Horizon," beamed Arrigo, who made his third trip to the island in
January for the yacht's sea trials.
It will be his second Horizon in six years; after ordering the larger yacht, he sold a 76-footer that he bought in 2001.
"I went everywhere and shopped, because this is a big deal," Arrigo said.