By Isaac Bonnell
The auto industry isn’t what it used to be. Chrysler is bankrupt. General Motors is bankrupt. Somehow this all seems so far away from the Pacific Northwest — but not for local car dealerships.
In Chrysler’s bankruptcy reorganization, the company made an unprecedented move and pulled its cars from 1,100 dealerships, including Roger Jobs Motors on Iowa Street. The dealership sold Jeep vehicles — made by Chrysler — alongside Audi, Volkswagen and Porsche.
“To lose the franchise, or effectively have it confiscated by the bankruptcy court, that was a surprise,” said Roger Jobs, who has sold Jeeps at his dealership for 24 years. “It solves Chrysler’s problem, but really it takes an asset that we have and basically nullifies it.”
Jobs knew that Chrysler was looking to consolidate its various lines of cars, which include Dodge and Jeep, into dealerships that carry all Chrysler vehicles. That model, the company contends, is more efficient and saves the company money. But it doesn’t make much sense to Jobs.
“We don’t cost them anything because they charge the dealerships for everything they provide us,” Jobs said. “Training, parts, signs — we pay for all of that ourselves. The manufacturer really has no financial tie to us, other than they sell us product.”
Under Washington state franchise laws, the dealership is insulated from the manufacturer and its assets are protected.
“Under normal circumstances, Chrysler would be buying back parts and buying back the signs and buying back the vehicles,” Jobs said. But through the bankruptcy, “they’re not doing any of that.”
Jobs is lucky that losing Jeep didn’t completely pull the rug out from under him. He has three other lines of cars to rely on and he said he plans to keep employees who focused specifically on Jeep and transition them into other roles.
Other dealerships around the country, though, are facing the prospect of closing entirely, which could eliminate up to 100,000 jobs, according to the National Automobile Dealers Association (NADA).
This raises the question: What is the new model for selling cars and will it work?
Outside of highly populated metropolitan areas, it is common for auto dealers to offer two or more brands of vehicles because the market is too small to survive on a single line of cars. Dealers will often pick lines that don’t directly compete in the same category.
For example, Jobs started selling Jeeps back in the ’80s to go along with his high-end imports because Audi, Volkswagen and Porsche didn’t offer SUVs.
“We were missing that market completely with no SUV on the import side, but by having Jeep we filled that void,” he said. “Well now all three of the import lines have an SUV.”
Although Jeep was a good fit for the dealership, Jobs said he is confident that he can survive without it and he isn’t looking to add another franchise. All three of the remaining brands now make SUVs and Audi and Volkswagen released new models this year to the North American market.
Since most car makers now make all types of vehicles — from vans to sedans — they are pushing for single-franchise dealerships instead of multiple-franchise dealerships. This will not only affect how cars are bought, but where cars are bought.
In general, people will not drive more than 25 miles to purchase a car, Jobs said. And with car manufacturers pushing for single-franchise dealerships, that is pushing dealers away from smaller markets.
“Small towns often can’t support a single-franchise location and therefore you just don’t see that manufacturer represented in that town,” Jobs said. “While some people are brand dedicated and are willing to make a long drive, many people see the convenience of dealing locally with a brand that is represented in their own home area. So if you’re a Dodge truck guy but there’s only a Ford dealer in your town, maybe the next truck you buy will be a Ford.”
For dealers outside of metropolitan areas, carrying multiple lines of cars has been a way of life.
“It just gives you more eggs in your basket,” said Rick Wilson of Wilson Motors, which carries Toyota and Mercedes-Benz. “Toyota and Mercedes make a good pair because Mercedes-Benz starts where Toyota stops and they don’t really compete with each other. Each company would like to be here by itself — that would be optimum. On the other hand, Toyota is smart enough to know that Mercedes-Benz is a good companion.”
Despite the turmoil surrounding the big car companies and the economy in general, auto sales are starting to rebound as people regain some faith in their finances, Wilson said.
“Financing has never been a problem,” he said. “I think people were just concerned about the future and being able to make payments for 36 months.”
Wilson said sales are starting to climb back up to where they used to be a year ago, a trend that Jobs is seeing as well. But that doesn’t mean smooth sailing in the upcoming months.
“I think we have to get through the GM bankruptcy and see what that does to the dynamic of how many cars are going to be sold annually,” Jobs said. “But there’s more consumer confidence now — as consumer confidence rises, our sales rise as well. As long as the sun stays out and people smile, we’ll continue selling cars. This is good car-selling weather.”