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Business & Technology

Johnson City auto dealerships optimistic as auto industry crisis continues

December 14th, 2008 12:00 am by JEFF KEELING

   The past few months have been a walk through the wilderness on Johnson City’s Motor Mile, and one veteran auto retailer says conditions on dealers’ showroom floors are unlike any he’s seen during nearly 40 years in the domestic side of the business.
    “It will be 37 years in a month that I’ve been in the automobile business for a living, and this is something I’ve never seen before, what we’re going through right now,” says Freddy Gonzalez, who took over what is now Chaparral GMC-Buick-Pontiac in 1993. “It’s totally, totally different.”
    Gonzalez, who has worked both as a retailer and a General Motors representative, says the path to the current domestic auto industry crisis has been a long (and perhaps largely preventable) one.
    “Does it surprise
me that it
happened? No. Does it surprise me that it got this severe this quick? Yeah. This (the industry crisis) is our third piece of the puzzle. First there was gasoline prices, then there was the mortgage thing (sapping consumer confidence and buying power) and now this.”
    Dealers are heading to work every day trying to stay positive, Gonzalez says, but the reality is that in the Tri-Cities and elsewhere, especially for those selling domestic brands, belts have gotten tight, the future is uncertain and owners are pinching pennies and trying to ride out an unprecedented sales slowdown. “I would say that the last couple months, a lot of domestic dealers are probably off around half of what they were this time last year,” Gonzalez says. “I don’t know for sure, because I don’t get numbers on anybody else and when I do talk with them, we don’t talk about that because it’s just a downer. We’re trying to say to each other, ‘come on, let’s keep swinging.’ ”
    Walk around the Chaparral property and things still appear normal. Salespeople stand ready to work deals, new cars sit shiny and inviting on the lot and in the showroom, and mechanics are busy in the large garage performing warranty and maintenance work.
    But as those folks and their fellow dealership employees toil up and down the Motor Mile, it doesn’t take much more than flipping the showroom TV to CNN to realize that underneath the normalcy, times are, as Gonzalez says, totally different. Politicians grill the manufacturers’ CEOs and the labor union boss as the Big Three request billions in loans to keep them solvent, and dealerships across the land remain in limbo.
    Gonzalez, who after graduate school in Texas spent 15 years as a “field representative” for GM, representing the company in its relationship with dealers, says he and his wife, Susan, could probably walk away from all the current turmoil — but too much more is at stake.
    “We’ve got 40, 41 families that rely upon this business making it. That’s something we take real seriously ... and we want them to continue to rely upon that and to be able to come here and earn their living every day.”
    In addition to their contribution to the employment base, Gonzalez says, local dealers tend to be closely involved in the community. Chaparral sponsors everything from Babe Ruth baseball teams to college scholarships, Boys and Girls Club programs to the Ronald McDonald House, and Gonzalez says that type of support can be multiplied by the number of dealers in Johnson City.
    “We pretty much all are involved in that way.”
    Dealers are also generally an optimistic lot, and Gonzalez says he and most of his colleagues remain so.
    “We all know this will pass, and in the interim manufacturers are offering the largest incentives ever,” he says, adding that at least locally, financing remains available even for buyers whose credit isn’t the strongest.
    While he doesn’t have blinders on when it comes to today’s problems, Gonzalez says one of the most frustrating things for him at the local level is the fear that he sees gripping consumers who have safe jobs, strong finances, retirement savings and good prospects for the future.
    “I’ve asked six or eight people the last few weeks about those things, it’s clear they’re still doing well, and I say, ‘What are you afraid of?’ They say, ‘it don’t look good.’ I say, ‘I understand that, but what’s your fear?’
    “They say, ‘I read this, I heard this, I saw this.’ That fear is something that’s hurting us, I think unnecessarily.”
    So Gonzalez and his colleagues are using their experience and strategies to keep “taking care of customers,” as they like to put it. “The way things are going, we have made some significant changes — some painful changes.”
    Those kind of adjustments can only go on for so long though, Gonzalez says, and every dealer — whether selling Buicks, Chevys, Fords or even Toyotas or Hondas, both of which have also seen sharp sales drops — knows that.
    “No matter how many changes we make, or any automobile dealership makes, you can only reduce your expenses so much,” Gonzalez says. “At some point the law of diminishing returns comes in if you try to reduce them any further, and on the other hand you still need sales to generate the funds you need to operate.
    “How long can I or any automobile dealership, domestic dealership particularly, continue on in this environment? Everybody has their mark. Some can last this long, some can last this long,” Gonzalez says, widening the space between his hands. “Some already have reached that mark.
    “But should it continue like this, or should one of the domestics declare bankruptcy, in my case General Motors, then suddenly that schedule becomes tighter.”
    Until and unless that day comes, Gonzalez plans to keep welcoming customers with a smile and sticking to Chaparral’s trademark: No bull.

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