Amid talk of auto bailout, dealers face serious trouble

McClatchy Newspapers

WASHINGTON — Would-be car buyers can’t get credit, vehicle sales are plunging, and auto sales jobs are in jeopardy — but as Washington considers aid to the auto industry, it’s offering no direct help for car dealers.

Yet across the nation, many dealerships face serious problems, and their fate could affect not just those who work for them, but their entire communities.

Chris Leith, who owns three dealerships in Wake Forest, N.C., has seen business fall nearly 50 percent from a year ago. He had to lay off workers in the past month, and he cut advertising.

Across the country, Scott Lasher, whose family-owned company runs dealerships in Sacramento, Calif., and elsewhere in the state’s Central Valley, sees similar problems.

“The reality is, there are too many dealers, the domestic side more so than the imports,” he said. “You’ve got a bunch of dealers not selling enough cars, so as these economic times happen, guys are going to button it up.”

Congress is expected to consider a $15 billion aid package, maybe as soon as today, to help General Motors, Ford and Chrysler. However, if the plan runs into trouble among lawmakers — a real possibility — one key reason why will be that members of Congress see Washington’s plan as too inattentive to Main Street.

The nation’s 20,700 independent new-car dealerships are often major players — and community pillars — throughout America. A report last month from Casesa Shapiro Group, an auto industry consulting firm, estimated that the average dealer has approximately $2.5 million invested in local land, buildings, equipment and furniture.

The average dealer has $11.3 million invested in his business, the study found. In San Jose, Calif., for instance, the estimated 220 dealers have invested $2.48 billion and employ nearly 12,000, and in Greensboro, N.C., the 90 dealerships have invested $1 billion and employ nearly 5,000.

With so much at stake, members of Congress from both parties, from urban areas and small towns, want more attention paid to the dealers.

“Many of these small, independently owned dealerships are anchors in many communities that provide support for nonprofits. They create jobs and stability and development,” said Rep. Maxine Waters, D-Calif., who represents a district in Los Angeles that includes some low-income areas.

“I have not seen the kind of discussion about assistance for these dealerships that would make me want to be very anxious about supporting a rescue plan,” Waters said.

Dealers aren’t interested in a piece of the bailout, but instead are urging Washington to take serious steps that would “bring back consumer confidence,” said James Fleming, the president of the Connecticut Automotive Retailers Association, who testified before the Senate Banking Committee last week.

To help dealers temporarily, the national auto dealers’ group is seeking access to a Small Business Administration low-interest loan program, which dealers used in the 1980s for greater access to working capital. They’re unlikely to receive such access this month, but it’s been discussed as a potential piece of a Democratic economic stimulus package early next year.