By Bill Willard
The car business is big business run by The Big Boys; franchised car dealerships are small businesses run by small-business owners like us. The relationship, never cozy, has soured since the economy hit the skids—soured perhaps permanently.
Ironically, many car dealerships that have had their franchises yanked are well-run, highly successful businesses. But that didn’t matter when car companies were handing out ultimatums: You’re history. Sell those new vehicles by a certain date or kiss your company-paid incentives goodbye.
I’ll leave it to others to ferret out what Washington has on the Big Three (actually, GM and Chrysler; Ford seems OK), and what this president of ours is up to. For now the questions are: How much trouble is the car business in? What effect will it have on local dealers and the communities they serve? And what are they doing about it?
What I’ve Learned
The ramifications of all this on the car business are huge. Automakers have pledged to make the transition as painless as possible, but that doesn’t mean there won’t be problems. With thousands of Chrysler and GM dealerships closing, customers could be confronted with problems over warranty coverage and trade-ins, among other matters. “When all of these relationships are disrupted, you can’t help but have some elements of chaos, and some practical problems occur,” observes Aaron H. Jacoby, a Los Angeles lawyer who represents car dealers.
As for otherwise profitable car dealers being forced out of business, any thought of suing the car companies is being dismissed (Think: Fighting City Hall). But because Chrysler and GM have pledged to stand behind their warranties, this could be a good time for consumers to hunt for bargains as dealers sweat out unloading inventories. According to a report by Sonic Automotive, a chain of 164 Iowa car dealerships, “The lack of liquidity resulting from the financial services industry crisis has also hindered our ability to refinance our upcoming debt obligations in 2009 and 2010.
For now, however, car shops have bigger and better fish to fry! Certainly, bankruptcies could result, but a part of bankruptcy law allows companies to reorganize to protect assets while they’re figuring out how to pay their debts, though a federal bankruptcy court also might order assets to be sold to pay creditors.
The fact is, for a lot of feisty car dealers across the country all this carries a familiar aroma: Opportunity! “The other side of the coin is that we’re going forward with business, we’re going to be an independent used car dealer,” northwest Iowa Chrysler dealer, Scott Schuelke has remarked, adding. “We’re keeping the shop open and we’re going to service our customers just like we have for 78-years! We may even look into another franchise one day!” Do I detect a wink?
Those are noble sentiments from people who care about their own success, but who also care about people in their communities they’ve done business with over the years, or who they’ve employed, or both.
But that’s what we’ve come to expect from Freestyle Entrepreneurs!
What Do You Think? We’d like to hear from you, especially if you’re in the car business. Have you registered?
Bill Willard is a freelance commercial writer in Clearwater FL. A high-impact writer and editor for over 30 years, in addition to his byline pieces, Bill’s beat includes ghostwriting and editing for businesses of all types and sizes, professional practitioners and individuals. He is a www.thefreestyleentrepreneur.com Contributing Author. Visit his Website: www.writergazette.com/WillardAssociates.shtml. Or contact him at firstname.lastname@example.org to sign up for his popular e-blog, Daily Grin.