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Time to Move On

June 2009, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

Unsure of where this recession is headed, I can’t blame lawmakers for their involvement, but can we make sure that all sides are heard before we jump to conclusions.

Take these consumer-protection bills Michael Benoit’s been writing about lately. While well intentioned, these bills could render F&I extinct while making it virtually impossible for downtrodden consumers to repair their credit.

Listen, I think we can all agree that there’s plenty of blame to spread around these days. Should we have counseled consumers on what finance-appropriate means? Sure. But shouldn’t consumers be educated enough to know how to use their credit. I just don’t buy the argument that creditors duped consumers into those exotic loans. I knew they were wrong for me when I applied for my home loan.

My point is government needs to take a step back and make sure its decisions aren’t made in a vacuum, or that lawmakers aren’t using this situation to grandstand in front of their constituents. Take this June 2 hearing proposed by the Senate Commerce Committee, which wants the CEOs of Chrysler and General Motors to explain the impacts of their recent actions. What is there to gain by doing that?

Shoot, Chrysler’s dealer cuts were made under the guise of bankruptcy, so what exactly does it have to explain? And if the question is how Chrysler intends to honor warranties, or redistribute parts and the 44,000 vehicles on the lots of those 789 cut dealers, I’ll send you my notes from Chrysler’s May 14 conference call. Heck, even the Chrysler Dealer Council isn’t balking at the automaker’s moves.

As for GM, there’s little doubt it’s headed for bankruptcy after its failed attempt at a debt-for-equity swap with bondholders in May. And the company’s been more than clear about not renewing the franchise agreements of 1,124 “underperforming” dealerships come October 2010. And it was clear the phasing out or sale of Saturn, Hummer, Saab and
Pontiac would result in another 505 dealer cuts.

I agree with the argument that dealers are of no expense to these troubled automakers, but the fact is these companies have been trying to shed dealers for years. Chrysler attempted to do so with its Project Alpha in 2004, and is trying to do so again with its newest revival strategy, dubbed Project Genesis. Unfortunately, neither program has resulted in major cuts, which is why Chrysler chiefs Jim Press and Steve Landry heralded the chance do so under bankruptcy as a “once in a lifetime opportunity.”

“None of us want to eliminate dealers. These are longtime partners of the company,” they said. Bottom line, there just isn’t enough industry right now, which is why Chrysler is sacrificing 14 percent of its volume so the remaining 86 percent flourish.

But don’t get me wrong, it bothered me when the Chrysler execs said profitability and capital weren’t deciding factors in which dealers would remain, especially after learning that one of the dealers on Chrysler’s 40-page hit list employed one of my key contacts. Her name is Julie Horns, one of the most respected F&I managers on our Website’s forum.

Her Continental Chrysler Jeep store, which was set to celebrate its 55th anniversary on May 28, lost out to a Dodge dealership that opened up across the street last year. “How we didn’t meet the facility requirement is beyond me,” Horns said. “I have been taking calls from customers who are beside themselves about the possibility of not being able to service their vehicles here. It’s very sad. We love our customers here at Continental and that love for us was clearly shown by all the calls and e-mails we received.”

Initially, Horns said her dealership would fight Chrysler’s decision. That changed four days later, as she informed me that the dealership was working with the city of Countryside, Ill., to amend an ordinance that prohibited independent used-car dealerships from operating there.

“… With four Continental stores in town, all well run, all with clean updated state of the art facilities, and having lost three dealers in the past year and all their associated tax revenues, they may be willing to make an exception,” she wrote in an e-mail.

Yes, it’s difficult to swallow Chrysler’s and GM’s cuts, but what exactly will another hearing accomplish. It’s time to move on. Horns has, and so has the soon-to-be “Continental Used Car Superstore … Home of New-Car Satisfaction at a Used-Car Price.” And Lord knows there are plenty of used cars to sell.

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