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Bill Heard Closure Rattles Industry

September 26, 2008

Rising fuel prices, a poor product mix, the credit crunch and troubles with a Georgia consumer protection agency have caught up with Bill Heard Enterprises, which announced on Wednesday the closure of 13 of its dealerships.

The announcement came nearly two weeks after the dealer group closed its Scottsdale, Ariz.-based facility on Sept. 12, impacting 150 employees. The most recent announcement will impact approximately 2,700 dealers.

“Rising fuel prices, a product portfolio of mostly heavy trucks and sport utility vehicles, economic recession, unfavorable local market conditions for vehicle sales, the crisis in the banking and financing sectors, and other factors all combined to create a business environment in which the company simply did not have the resources needed to continue to operate,” the company said in a prepared statement distributed through Alan Ulman, an Atlanta-based public relations professional.

Ulman couldn’t provide anymore details about the announcement, but did say he was also shocked by the news. “I’ve been their media contact for five years and I knew times were tough … they were fighting through the tough times, so this is very shocking.”

Bill Heard’s problems were revealed in late August when GMAC Financial Services cut off its floorplanning line of credit. The announcement was made the same month the 89-year-old dealer learned that a Georgia consumer watchdog agency filed new claims that the company participated in deceptive and misleading business practices. The court filing stemmed from two lawsuits filed in an Atlanta court last year.

The Columbus, Ga.-based company, which had five dealerships in Georgia and nine dealers in six other states, had denied the allegations made by the Governor’s Office of Consumer Affairs (OCA).

The OCA began warning consumers shortly after the retailer’s announced closure to complete all business dealings with the dealer group. A spokesperson for the OCA said he wasn’t sure what the closing of Bill Heard and its dealerships means for the case it has against the retailer.

“There are a number of unknowns, obviously,” said Shawn Conroy, spokesperson for the OCA. “We would like to conclude the case. However, if the company files for bankruptcy, that’s another path we have to explore. We just don’t know at this point what’s going to happen with the dealerships.”

Calls to the dealerships went unanswered as of Thursday, as callers were met with a looping message. Conroy said he heard that one of the dealerships in Texas was already sold. Calls to the Sugar Land, Texas, dealership went unanswered and the Houston-based dealership’s phone number was disconnected.

According to the Columbus Ledger-Enquirer, Carl Gregory Enterprises, a 10-store chain based in Columbus, Ga., is interested in buying Heard’s flagship store in Columbus. Automotive News, citing sources close to the talks, also reported that Hendrick Automotive Group, a 58-store chain owned by NASCAR-team owner Rick Hendrick, is interested in buying some of the closed Bill Heard stores.

Conroy said his office has heard both negative and positive stories about consumers attempting to complete any dealings with the retailer. One person, he said, was able to get his or her title and vehicle back. Another individual, who had taken his or her vehicle in for service, could only see their vehicle locked behind a closed gate.

“When we have situations like this, we can’t represent the individual consumers,” Conroy said. “So the consumers are basically left in a position to fend for themselves by hiring an attorney. We try to mediate when we can, but we’re representing the state and not the individual.”

The dispute between Bill Heard and the OCA isn’t the first. The dealer has had to answer to the consumer protection agency at least 15 times in the last 16 years. The retailer also faced complaints about its business practices in Tennessee, Arizona and Florida. It also recently had its accreditation revoked by the Atlanta Better Business Bureau on June 12.

In its most recent filing, the OCA charged various Bill Heard dealerships in Georgia with failing to pay off loans or trade-ins, making the consumer liable for the bank note on both vehicles; misrepresenting a vehicle’s value to third-party lenders to secure financing for customers by saying options and extra features were added to a vehicle when they were not; and forging customer signatures.

Bill Heard had also taken action against the OCA, filing a lawsuit in May 2007 under the Georgia Open Records Act to obtain the names of people and dealerships who had filed complaints against the company regarding flyers the retailer mailed out last October. The state, which had notified the dealer group of the complaints last November, filed a counterclaim in July 2007. It charged the company with using misleading advertising that looked like a vehicle recall notice, and charged the company with violating the Georgia Fair Business Practices Act of 1975.

In the midst of this ongoing dispute, GMAC discontinued credit for new-car inventory to some of the company’s 14 dealerships. A GMAC spokesperson said at the time that the company does not comment on specific dealers, but that the action taken was part of a regular review and mitigation of credit risk.

“This is a very large dealership selling American cars … it’s very unfortunate what’s happened to them,” said the OCA’s Conroy. “It’s especially unfortunate for the 2,700 employees.”

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