Desperate Times

Every day, in local newspapers across the country, you can find stories of dealerships having to shut their doors. That alone is sad, but more distressing are the tragic ways some desperate dealers are leaving the business. A few weeks ago, Nebraska dealer Allen Patch and two managers, comptroller Rachel Fait, and General Manager Rick Covello, failed to show up to work one day. According to news reports,

Every day, in local newspapers across the country, you can find stories of dealerships having to shut their doors. That alone is sad, but more distressing are the tragic ways some desperate dealers are leaving the business.

A few weeks ago, Nebraska dealer Allen Patch and two managers, comptroller Rachel Fait, and General Manager Rick Covello, failed to show up to work one day. According to news reports, Patch, who owns Legacy Auto Sales, allegedly conspired with Fait and Covello to steal 81 Ford and Toyota vehicles totalling $2.5 million.

Car haulers secretly loaded the vehicles onto trucks during a weekend late at night. The vehicles began turning up at auctions in Nevada and Utah. Patch, Covello and Fait subsequently turned themselves in.

Meanwhile, in February, Gregory Graham, owner of Graham Colonial Motors in Ligonier, PA, died after suffering a heart attack while attempting to burn several vehicles on his store's lot. Graham reportedly owed $720,000 in taxes.

The tragedy continues as his brother Randolph, a general manager at the dealership, was found dead Saturday morning in his car. According to news reports, he had been distraught over his brother's death.

And in what is becomming an all too familiar story, Classic Kia in Texas (no relationship to Tom Durant's Classic Group) allegedly left at least 223 car buyers and their lenders with title problems, according to the Star Telegram. Many customers are learning the loans on vehicles they traded in have not been paid. Officials estimate the dealership owed $250,000 to $300,000 in sales taxes and licensing fees to the state and county.

There's a right way and a wrong way of doing things. Unfortunately, these, and other dealers, see no way out, other than resorting to what amounts to crime. We may be reading similar stories in the future as the pressure on dealership finances continues to mount.

It's easy to moralize, but there are some timeless truths at work that we all would do well to remember. The issue rarely is the bad times alone. Instead, the problems often start during the good times with poor decision making, a lack of preparing for tough times and possibly a lack of character.

That's not to say preparing for bad times will prevent you from having to close down your dealership. But would you rather go out a criminal in handcuffs, or go out with your head held high knowing you did it the right way?

As I'm writing this, I'm also reading how Alan Starling, former NADA chairman, had to close down his Chrysler Dodge Jeep store over the weekend. In the news report, he emphatically states he is committed to his customers and his employees and will take care of them to the best of his ability.

Knowing Alan, I believe him.

Also consider Alan Young who owned General Motors dealerships in Dallas and Fort Worth, TX. He was forced to close his doors in December. In the story in the Star Telegram recounting Classic Kia's problems, tax assessor Betsy Price tells the paper that Young paid off his titles and sales tax before he shut down his business in mid-December.

Sound decisions in good times means being able to sleep at night in the bad times.

TAGS: Dealers Retail
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