Plenty of Hurt to Go Around

Jerry Zegley is a small-volume single franchise dealer in a huge market area, Chicago. Some might say Roseland Pontiac, his three-generation family business, is another casualty of crime in cities and the harsh economic climate. That's part of the picture, he admits. But his inner city business is being closed because General Motors Co. decided to shed brands when it restructured. His business certainly

Jerry Zegley is a small-volume single franchise dealer in a huge market area, Chicago. Some might say Roseland Pontiac, his three-generation family business, is another casualty of crime in cities and the harsh economic climate.

That's part of the picture, he admits. But his inner city business is being closed because General Motors Co. decided to shed brands when it restructured.

His business certainly had shrunk in the last few decades. So did his inventory. In November, he had only had 16 cars on his new-car lot. “I do everything here,” he says, running parts, sales and service operations.

It's small, Ma and Pa-shop dealers like Zegley that are being hit hard by the domestic dealer cutbacks, whether in big or rural markets. As small businesses, they form the backbone of America.

But Zegley refuses to let the family venture disappear. Roseland had been a loyal Pontiac exclusive dealership since his grandfather opened its doors in 1933. The Zegleys actually started as Buick in 1911. In better days, they hobnobbed with the best and brightest at GM functions.

He recalls joking with Pontiac zone staffers and GM honchos that the dealership would be 100 years old in 2011, older than Pontiac, not as old as Buick at 106, of course.

That was before GM announced its brand closures. Pontiac is one of the four brands GM is shedding.

Now Zegley is forced to shift gears, speeding downhill fast. But He isn't giving up Roseland. He is converting to a used-car operation under the Zegley banner. This one will sell all brands, another trend in the industry.

Greg Jackson, CEO of Jackson Automotive Management and Prestige Automotive in St. Clair Shores, MI, has weathered the economic storms that hit the Midwest particularly hard. Prestige has GM, Ford, Mercedes-Benz and Saturn franchises primarily in Michigan.

In 2007, Black Enterprise magazine named him one of the top 100 grossing black-owned businesses.

Jackson, a 20-year minority dealer and formerly on GM's National Dealer Council, will lose Saturn and perhaps other domestics, but doesn't want to talk about that. Instead, he's concerned about where the domestic auto industry is heading.

“The industry will certainly be all right — but it will be a different industry than we remember it. My concern is that the domestics don't go too far in all the changes they're making that they don't hurt themselves,” says Jackson.

He adds: “They need to be listening closer to the dealer body.”

Alabama and Florida dealer Ken Wesenberg, at Classic Cadillac, Pontiac and GMC, is losing his Cadillac and Pontiac franchises due to the dealer cuts.

A loyal and profitable dealer, he echoes many dealers' frustrations with the closures. “It's just plain wrong. I can't understand how they can walk in and close you when you are profitable.”

Is there enough public outcry about the dealer closings? Tammy Darvish, dealer at Maryland's Darcars chain, thinks not.

“There is not enough public outcry, but only because America does not know the truth,” she says. “They rushed this bankruptcy through in less than a month and the public only knows what the auto task force has told them.

“If the public knew that the proposed closings of 3,389 dealerships affected nearly 170,000 direct jobs they might be shocked.”

She added that the federal auto task force's “mistaken intrusion into the unilateral revocation of dealers' property rights was astonishing and uncalled for.”

She wonders how the task force with scant auto experience can learn the complex car business in less than 30 days. “Can you imagine a doctor or pilot teaching themselves about operating on bodies or flying planes in less than a month?” she asks.

She and fellow dealers Jack Fitzgerald of Maryland and Alan Spitzer of Ohio formed the Committee to Restore Dealer Rights to lobby the U.S. Congress.

The group scored a victory when Congress passed a law requiring a third-party arbitration review process for Chrysler and GM dealers who were told they were losing their franchises.

Spitzer has been garnering emails and such from dealers who relate what he calls “horror stories” from disenfranchised dealers. Here are excerpts from four of them:

  • “Due to continued post-termination losses, even if my franchises were given back, I do not feel I have the financial stability to weather the storm while supporting an idle inventory of dead CDJ (Chrysler, Dodge, Jeep) merchandise…without some types of compensation from the government or the factory…”
  • “I'm a rejected dealer who can't survive as a used car, service, parts and body shop operation. We will be closing our doors. This email will no longer be valid.”
  • “I am trying. It is getting very difficult. I have only five new cars left in stock. I have closed my GMC truck store. GM is stealing' money from me as it pertains to expenses that they bill my open account. There is nobody we can complain to…they just “take” the money. We are still open. The dealers around me are dropping like flies. I am not giving up.”
  • “They are billing me for a T-1 line I was paying GM $500 a month for. They forced me to close my GMC truck store that was connected electronically to my Buick store through this T-1 line. They charged me $14,000 to cancel the line. Outrageous !!! My stores are both closing not due to anything that I did. They also billed me for and sent special tools the very day before I got my ‘doom’ letter…If we protest we put our wind-down money in jeopardy. I feel I am living in another country. It will cost my brother and I $6 million to be a Chevy dealer for 18 months. They keep the guy five miles from us (whom we outsold in 2008 by 180 vehicles) and get rid of us. The government gave them the power to pick and choose who they wanted to keep. It is just so hard to believe that in AMERICA that this is allowed to happen.”
TAGS: Dealers Retail
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