By Angela Reinhardt
The week after thousands of auto dealerships nationwide were given the pink slip, Lawson Chevrolet and Jasper Jeep of Pickens County are breathing a sigh of relief and looking forward to more lucrative days.
Last week proved historic for the auto industry with bankrupt Chrysler announcing Thursday it would close 789 of its 3,200 American dealers and GM announcing Friday that about 1,110 of its dealers (among 6,000) would lose their franchise agreements.
Chrysler owns the Jeep brand, and GM owns Chevrolet.
Ford, which also has a large dealership in Pickens County, has not been subject to any bankruptcy provisions or finance agreement severings.
Representatives from Vernie Jones Ford were not available before press time.
The dealership cuts came in an effort to shave off deadweight and give surviving dealerships a chance to become profitable in the shrinking new-vehicle market. More sweeping cuts are expected by both companies in the near future.
Ryker Lowe, president of Jasper Jeep, said they received their letter Thursday but that the news they received was welcomed, informing the dealer they were one of the fortunate that could remain open for business.
“We heard rumors something was coming,” Lowe said, “but Chrysler didn’t tell us what it was. They are having to do things at a fast clip…Thank goodness we’ve got a good reputation, which we have earned.”
Lowe said that while it’s business as usual at the office as long as a dealer keeps that franchise agreement, the auto industry upheaval has left many customers questioning the security of their warranties.
“They want to know if their warranties will be good,” Lowe said. “Now the warranties are backed by the U.S. government. When [Chrysler] reemerges from bankruptcy, they [the warranties] will revert to Chrysler.”
But Lowe said answering the warranty question hasn’t always been as simple in the last month. “It’s been tough from an individual standpoint, as an individual dealership. It’s not always easy, because before you had a company behind you. It’s just hard when you can’t give [customers] a definitive answer because you don’t know.”
Lowe did give kudos to Chrysler, which filed for bankruptcy protection in late April, saying the car manufacturer has kept dealership owners abreast of developments as quickly as they could.
Lowe said, “Many questions dealers have are being cleared up through conference calls,” and further, that there have been more of these meetings in the last month than there have been in the previous six months.
The Jasper Jeep president also said the closing of most of Chrysler’s plants during the bankruptcy, expected to last 30 to 60 days, means dealers won’t be able to order inventory when they need it.
What’s more, the brand’s lending arm, Chrysler Financial, which financed an estimated 60 to 70 percent of dealership vehicles (according to Reuters.com) has gone belly up. Lowe said most of Chrysler’s financing has been absorbed by General Motors Acceptance Corporation (GMAC), a subsidiary of General Motors.
The majority of auto dealerships finance vehicles on their lots through simple-interest notes. Without outside financing, most dealers would not be able to survive.
Al Lawson, of Lawson Chevrolet, who has also been given the green light to keep up his business as usual, said the main concern his potential customers have is with the future of General Motors. They are waiting, he said, to see if the Detroit auto giant will file for bankruptcy protection as Chrysler has.
Lawson emphasized that, “Filing for bankruptcy doesn’t mean a company is going to dissolve. When Delta went bankrupt, they didn’t just land all the planes. There can be some positives to bankruptcy. It can reduce expense with union contracts,” among other things, he said.
Lawson reported new car sales at Lawson Chevrolet are down 40-percent from last year, but he said he is hopeful things are going to pick up when the dust settles. He reported used-car sales at his lot holding steady.
“But used car prices are up so much now. It would be better to just buy new or trade in, in my opinion. It’s a great time to get a good value on a new car and a good trade,” he said.
Lowe also reported used car sales increasing at Jasper Jeep, but added that while new car sales are still down overall, they have begun to spike again.
“As of late, we have had some good days,” Lowe said, crediting the generous rebates offered by Chrysler coupled with their famous Lifetime Powertrain Warranty.
Lowe said customer financing is more difficult to qualify for now, with credit and debt-to-income ratios being checked much more rigorously than before. He said, however, that Jasper Jeep is not being forced to turn more people away, but simply said the volume of applicants has decreased significantly.
According to US News, auto sales peaked in 2006 with 17 million vehicles moving off American lots. In 2008 that number fell to 13 million, and 2009 is shaping up to be even worse.
“Nobody pays attention to your financing like you do,” Lowe said, adding that people who know they can’t afford a vehicle just don’t come in anymore.
“You can really tell from the traffic on the showroom floor. Now [customers] can’t get away with giving someone a line, and as the economy has deteriorated, they just keep the car they have…People are looking at cars like a necessity now.”
Lowe and Lawson both said they would always like sales to be better, but they are confident their businesses aren’t going away anytime soon.
“We have no plans of closing. We are really proud of our reputation,” Lowe said. “The car business is always cyclical. You’ve got to be strong, resilient, and ready to weather bad and look forward to better. Despite whatever good or bad may happen in the corporate world, we will continue to do business in Jasper to the best of our ability, like we have over the last 33 years.”
Auto dealerships’ importance in small communities
Pickens County is home to three major auto dealerships, Jasper Jeep, Lawson Chevrolet and Vernie Jones Ford. And brutal blows recently taken by the car industry have highlighted the importance of these businesses to the financial landscape of small communities.
Not only do car dealerships add greatly to the tax base of the county via sales tax on car sales and property taxes paid on car lots, they also support the local community through donations to charities and schools and by frequent advertising and sponsorships.
“We support almost every charity we can,” Lawson said. “We also loan cars to the Driver’s Ed program at the high school. With all that’s going on, we have had to cut some of the money we give, but we are still trying. We just have to pick and choose a little more than we did.”
Many charities around the nation that relied on these donations are expected to suffer as a result of dealerships shutting their doors.
Large dealerships like the three in Pickens also employ a large number of local workers.
Lawson said he has 43 full-time employees. Lowe, of Jasper Jeep, said that while he is unsure how many employees he has, he is proud to say he has a very loyal staff and, as of yet, has not had to let any of them go.
“The big three here in Jasper is a big part of the industry,” Lowe said. “But the three of us have all been good to our customers, and they have been good to us. In a small town, word travels fast. You’ve got all that material stuff, like taxes and revenue and all that, but when you go into Jasper Jeep and Vernie Jones and Lawson Chevrolet, folks know that we are going to listen to what they say.
“There’s this idea of the guy in the sharkskin suit, but we all have developed good reputations with our customers.” |
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| PHOTO BY DAMON HOWELL |
| Ryker Lowe with Jasper Jeep makes a sales pitch on a 2010 Jeep Wrangler at the car lot on Hwy. 515. |
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