Car dealer sees losses accelerate

CENTERVILLE — It's the start of a new year, and Jared Thompson, for one, can't wait to get the old one behind him.

Thompson sells cars for a living. Specifically, high-end, previously owned cars. Vehicles made by Audi, Porsche, Infiniti, BMW, Mercedes Benz and so forth. Every once in a while a Bentley finds its way onto his lot.

It's a niche he carved out for himself bit by bit over the past six years. He started by buying two cars from his home equity line and reselling them for a profit. That worked so well he did it again, and again, and again, until he was finally able to convince his wife they didn't need his day job — he was an investment counselor — any longer.

A car lover by nature, he hadn't just found his dream job, he had personally created it.

He called his one-man, independent dealership Specialties Automotive Group and leased a building in Centerville near the freeway with the mantra, "High-end cars at incredible prices."

At its height, Specialties Auto had an inventory of more than 110 cars. Things were going so well, Thompson bought the building he was leasing, doubled its size and built a new showroom. Business was hotter than the red Ferraris he was buying at the California auction.

That was a little over a year ago.

Then the economy crashed.

Among its most significant casualties are car dealers like Jared.

He's down to about 35 cars, a staff that used to be 12 has been cut to six, and instead of the two to three cars he was selling per day in 2007, lately he's lucky to average one.

"I know car guys who have been in the business 30 and 40 years," says Thompson, 32. "They all say they've never seen anything like this. It's like somebody reached up and turned off the spigot."

Worse than the slow sales is the fact that many of them are what can only euphemistically be termed "below profit."

"I had 23 sales in December," says Thompson. "And I went in the hole $16,000."

This comment shouldn't be confused with the time-honored, oft-delivered used car salesman's pitch of "I'm losing money on this deal!" — a remark traditionally muttered before the handshake.

These days, Thompson swears it's the truth — and he has the bank statements to prove it.

The problem, he says, boils down to one thing: credit.

Before Wall Street collapsed, he could finance his inventory — it's called "flooring" in the auto business — on a much more liberal, friendly basis. He could borrow the money to buy a car on a 90-day note and if the car wasn't sold in 90 days, he could find another lender and floor it again at a slightly higher rate. Buying more time was usually not a problem.