Biggest Chevy Dealer In USA Closes It Doors

[SaturnSkyDude]

Bill Heard Enterprises Inc., the biggest Chevrolet dealer in the country, said Wednesday it is closing its 13 remaining dealerships, unable to survive in a weak economy with high gas prices and an inventory heavy on trucks and SUVs.


Biggest US Chevy Dealer Closes Doors - AOL Money & Finance

[SR819]

Bigger ain't always better.

[G8TR]

Yeah, those of us here in Florida were pretty shocked. They were right down the road. I don't think the big problem is that they were big, the real problem is that the Heard family bought their first dealership in 1919. When a company with that provenance goes down we really have a problem.

[Gerry]

Heard had problems that went way beyond anything related to the economy. Just Google his name and block a whole day for reading about the corruption. He was on the outs with GMAC for financing due to many, many fraudulant transactions, which was just one of many straws that broke the camel's back. He couldn't have survived in a robust economy.

[roadsterrage]

Tried to buy a Blazer for my son one time from these azzholes in Huntsville, AL. Miserable experience, especially when they tried to hit me for a $750 DOC fee. Drove the 20 miles to Decatur and saved about $1500.

[user2264]

If this country doesn't fix the credit mess, there won't be many dealerships of any type left. I hear it is almost impossible to finance a car in today's climate.

Hold on to your wallet, this is going to be hell of a ride.

[G8TR]

Talked to a friend of mine that works for a dealership and he's pretty sure that his is getting ready to fold also. Not a great climate for anyone right now.

[Gerry]

Originally Posted by user2264

If this country doesn't fix the credit mess, there won't be many dealerships of any type left. I hear it is almost impossible to finance a car in today's climate.

Hold on to your wallet, this is going to be hell of a ride.

Hysterics born out of rumor. Credit is and will be available even if there is no bailout. People with credit issues (late, missed payments, poor income to debt ratios, short history and such) may not have credit available or have to pay much higher interest rates or bigger down payments. That’s how it used to work and we will likely go back to that formula. There is money to be made (and lost) in the credit business and that’s not ever going to change so to think that all credit will dry up just doesn’t work out as a business model to the financial industry.

[Griz]

Despite the latest news on the bailout, there is still money available to borrow for those that qualify for it. You'll have to have good credit and reasonable downpayment but hey, shouldn't you if you're going to borrow money?? Now, there won't be credit for those with poor credit history and those wanting to borrow 100% or more on a car/house. Then again, you really can't afford either if you have to borrow that much.

[Celt03]

A report out yesterday shows that it is expected that nearly one in every five car dealerships in the U.S. will close this fall.
It is estimated that approximately 3,800 auto dealers will be going out of business in coming months, up from a previous estimate of 2,700.

Note the below chart which shows each manufacturer sales.

[russsims]

Originally Posted by Gerry

Hysterics born out of rumor. Credit is and will be available even if there is no bailout. People with credit issues (late, missed payments, poor income to debt ratios, short history and such) may not have credit available or have to pay much higher interest rates or bigger down payments. That’s how it used to work and we will likely go back to that formula. There is money to be made (and lost) in the credit business and that’s not ever going to change so to think that all credit will dry up just doesn’t work out as a business model to the financial industry.

You are completely wrong on this--total lack of understanding of the financial/banking/economic world, but the point of this thread is about the Bill Heard group of 13 dealerships shutting down and having declared bankruptcy.

Yes, they were under attack by a few state Attorney Generals such as GA and TX. This stems from Bill Heard's long time sales tactics but that alone would not put them under. Out West you have the Cal Worthington group who had been attacked by several states for the same issues as Bill Heard. They end up after the lawyers work their majic with a consent decree where you do not admit guilt but say you will not do it any more, and possibly pay a fine but that will not put you under.

The cause for Bill Heard's failure was simple, the market transition from high profit, high volume SUV and trucks sales to lower volume, low profit small cars and a marked decline in auto sales. Then you add the massive size of his dealerships, the huge fixed costs, the lack of money from lending institutions for car loans to the public (the major reason cited by dealers now for sales declines), the fact he was not diversified with other brands other than basically Chevy, and the failure to act quickly to adjust to these serious issues by lowering his fixed costs was at the heart of the failure. All these issues result in a cash shortage and it was cash, or the lack of, that caused the failure.

The problem with GMAC was one of being out of trust, and GMAC then pulling their floor line. Out of trust is when a dealer sells a new vehicle that is floored via their flooring source such as GMAC, and the dealer fails to pay off the flooring source for the vehicle--this equals out of trust. For a high volume dealership it can get to millions of dollars in a very short period of time. Called on a Nissan dealer in LA that got to a $12 M out of trust situation in 30 days due to a mavrick General Manager and Finance Manager. Dealer closed their doors and declared bankruptcy.

If the flooring source catches the dealer doing this they legally by the terms of their flooring arrangement can cancel their floor line with the dealer. Heard tried work out a deal with GMAC to keep the line open or with on site oversight by GMAC reps keep the line open. Possibly in the past when GMAC was full owned by GM, which they no longer are, or GMAC, like other lending institutions have not lost so much with their mortgage loans, GMAC with possibly GM's support would have worked with them till they could have work out of the situation. The sales tactic issues hurt them with GM and understand that could have played a part in GM not pushing GMAC to keep the line open, but .......

Given the heavy monthly losses at each of Heard's dealerships due to the changing auto market, and lack of customer loan money it would have been a bad financial decision for GMAC to continue with the problem.

This is just the beginning, you are going to see numerous dealership closings and some of this is not all bad--there are far too many dealers for each of them to be profitable in a shrinking economy and lack of money for car loans. Many domestic brands and import brands have been trying to shrink their dealer bodies for some time but it is next to impossible given the motor vehicle laws that protect them. A manufacturer simply can not terminate a dealer without very good cause and reducing dealer count is not one of them.

[KimberlySky]

I know the people in Central Florida were VERY happy when they heard about this with the Sanford location.... for YEARS they had Horrible practices they would hide keys, keep people locked in rooms, say they had sold someone's paid off trade when deals were made, they would actually call the PD and have a cop roll up outside saying that there was a problem and when they saw the cop tell the customer that the cop was coming for them. They had tons of complaints on them from customers, and the PD for false calls etc. The State had been involved countless times, the police etc.

(ALL DOCUMENTED)

[snaponbob]

Just a point of clarification, "flooring" is a shorter term for "floor plan", which is a floating line of credit for the vehicle inventory (usually .50 to 1% per month).

I didn't have any dealings with that group, but if anybody here remembers Massy-Grindle Dodge in Orlando (and they had many other stores regionally) in the 70's, they were masters of all the negative aspects of automobile sales practices. I was there ONCE for about an hour and TWO fist fights broke out in closing rooms because of the "missing trade in" tactics. Absolutely legendary.

The auto industry (particularly domestic) was iwell into a consolidation mode well before oil started to sky rocket. When CarMax, Penske, Hendricks and the other monster chains starts closing stores THEN it is time to head for the woods.