Car dealers may not survive

Local auto dealers acknowledge dealerships will have to close even if Congress approves the Big Three automakers' request for $34 billion in loans and lines of credit.

As part of a restructuring plan submitted to Congress this week, General Motors Corp. said it plans to reduce its dealer ranks by 1,750 or 27 percent with 4,700 remaining by 2012. Meanwhile, Ford Motor Co. said it expects to end this year with about 3,790 dealers, down 606, or 14 percent, from the end of 2005.

Jeff Thredgold, an economist who consults for Zions Bank, noted that sales are down 30 percent to 40 percent, with even foreign automakers reporting fewer sales. "We will have fewer Utah auto dealers of new cars in a year than we have right now," he said.

No dealers in Utah have been closed down under pressure from the Big 3 in the past year, said Greg Bickmore, executive director of the 150-member New Car Dealers of Utah. "In other parts of the country, business has been more troublesome than in Utah, so some of those have gone," he said.

Since most dealerships are independent businesses, the automakers can't force them to close. But they can negotiate with dealerships, offering them money to close or consolidate with other dealers.

Other dealers could simply fail, said Robert H. Garff, chief executive officer of the Ken Garff Automotive Group. "You can count on that, unfortunately," he said. "I could name you names but it would be unfair of me to give a name to be printed when they have employees working there."

Those with more capital will be more likely to weather the tough times than those with tight cash flows, Bickmore said.

At the Garff Automotive Group, there have been recent layoffs of about 10 percent of the work force, both at dealerships and at corporate headquarters.

And dealers are going out of their way to attract business. At the Ken Garff Nissan dealership in Ogden, potential customers can be lured onto the lots with a display of 500,000 lights choreographed to music that people can hear on their car radios. If they don't have a radio on hand, they can sit in one of the vehicles on the lot.