The Industry's Leading Source For F&I, Sales And Technology

Special Finance®

Fighting for a Worthy Cause

June 2010, F&I and Showroom - Feature

by Tariq Kamal

After 36 years at 2950 N. Bellflower Blvd. in Long Beach, Calif., Cal Worthington Ford has become one of the city’s 10 biggest tax revenue generators and home to 115 employees. At the age of 89, local celebrity Calvin Coolidge Worthington still stars in the store’s TV and radio commercials. His grandson, Nick, runs the dealership’s parent company, which also includes franchises in Carlsbad, California and Alaska. So why are they contemplating a move from Long Beach?

The answer lies in an incentives package Nick Worthington says Ford Motor Co. put on the table in March to entice the dealership to relocate. Worthington told the city of Long Beach that he and his grandfather would prefer to keep the dealership where it is. But to turn down Ford’s offer and remain viable, they say they’ll need hundreds of thousands of dollars in loans from the city.

Go See Cal!

Like many dealers, Cal Worthington started small. He survived an impoverished upbringing in Dust Bowl-era Oklahoma to become one of the nation’s most successful auto retailers. He got into the car business after a distinguished career flying B-17 bombers for the Army Air Force in World War II. After leaving the military, he went from selling cars from a rented lot to signing franchise agreements; first with Hudson, then Chrysler and then with Ford in 1974.  

More than three decades later, Worthington is a living legend. Multiple generations of Southern Californians grew up watching his TV commercials, which co-starred a series of exotic animals as Worthington’s “dog,” Spot, each urging car buyers to “Go see Cal.” Millions did, and Cal Worthington Ford grew along with its owner’s fame.

Two years ago, the global economic crisis changed everything. The fallout from frozen credit markets led to the closing or disenfranchisement of thousands of dealerships, including one of Worthington’s closest neighbors, Champion Chevrolet of Long Beach. Cal Worthington Ford survived, but so did Pacific Ford in nearby Lakewood.

It is widely believed that the Detroit Three stand a better chance for recovery under the “megadealership” model employed by Japanese automakers operating in the United States. This model requires large franchises to serve exclusive markets to prevent dealer oversaturation.

The adoption of this business structure could explain why Ford would wish to put some distance between Worthington and Pacific Ford, but the terms of the purported incentives remain unclear. In a letter to Long Beach’s Deputy City Manager, Reggie Harrison, Nick Worthington described Ford’s offer as “very lucrative.” When contacted for comment by the Los Angeles Business Journal, Ford Motor spokesman John Clinard would offer only a tacit confirmation that any discussions had taken place.

“To ensure that our dealers provide the best coverage for the public and achieve profitable sales and service volume for their businesses, we continually monitor market coverage and from time to time suggest that dealers consider relocation,” Clinard said.

Desperate Measures

The alternative to moving is to secure enough financing for Cal Worthington Ford to expand into the now-vacant Champion Chevrolet lot. According to Nick Worthington’s letter, that would offset the refusal of incentives from his OEM and allow the dealership to increase its annual sales goal to $100 million.

“… We would like to partner with the city of Long Beach to make this expansion a reality in order to retain the considerable sales tax generation and job opportunities here in our local community,” he wrote.

There is a precedent. Several other dealerships in Southern California have won financial concessions from cities fearful of losing tax revenue from stores forced to close or relocate:

Norco Mazda and Frahm Chrysler Jeep Dodge, Norco, Calif.: City Manager Jeff Allred told The Wall Street Journal that Norco, a city located in the Inland Empire area east of Los Angeles, gets about 40 percent of its sales tax revenue from its auto dealerships. Facing closure after losing their floorplan financing in late 2008, the owners of Norco Mazda asked the city for help on behalf of their store and neighboring Frahm Chrysler Jeep Dodge. The city answered with $500,000 lines of credit for each dealership. Several months later, Norco Mazda closed its doors and began defaulting on its payments. City officials are attempting to work out a new repayment plan with the former owner, but hedged their bets by filing a civil suit against the dealer in May. As of this writing, Frahm Chrysler Jeep Dodge is in business and current on its payments to the city.

Ostrom Chevrolet, Montebello, Calif.: In April 2009, the City of Montebello purchased the land under Ostrom Chevrolet for $12 million and began leasing it back to the dealer. By that time, the dealership had been in business for more than 80 years and, like Cal Worthington Ford, is one of its city’s Top 10 tax revenue generators.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email: