On Wednesday, Sept. 24, Bill Heard Enterprises Inc. closed its 13 remaining dealerships, including the flagship store in Columbus, Ga., that his father had founded nearly 90 years ago.
Hendrick Automotive Group, the 58-store dealership group owned by NASCAR team owner Rick Hendrick, is in talks to buy some of the closed Bill Heard Enterprises stores.
"If there's a potential opportunity to expand our company, we're always going to be interested in discussing it," Hendrick said in a statement.
Other major dealers are rumored to be potential buyers, but none have confirmed an interest.
The man who called himself "Mr. Big Volume" regularly ranked among the top 10 dealers in the country. With retail sales of 40,781 units last year, Heard's operation ranked 13th on Automotive News' list of the top 125 U.S. dealership groups.
Heard's retail sales averaged 2,913 units per dealership, more than five times the volume of the average Chevy store. But those sales volumes were generated via a mix of hard-sell tactics that got Heard into deep legal trouble with regulators in several states.
In November 2007, General Motors threatened to yank Heard's franchise at a Georgia store over a fake recall notice mailed to 10,000 consumers. That fake recall triggered lawsuits that could result in civil penalties of $50 million or more.
June: Bill Heard Chevrolet in Scottsdale, Ariz., agrees to a $225,000 settlement with the Arizona attorney general. The store allegedly engaged in deceptive advertising and sales practices.
July: Heard tells the Ledger-Enquirer of Columbus, Ga., that he is looking to sell “two or three” of his dealerships because of slow sales. Heard also puts his
$17 million lakefront home on the market.
Aug. 21: GMAC halts floorplanning line of credit for all Heard dealerships it finances. Heard breaks off negotiations with the Georgia Governor’s Office of Consumer Affairs regarding a lawsuit seeking $50 million in civil penalties over deceptive advertisements.
Aug. 22: Office of Consumer Affairs amends its lawsuit, seeking higher penalties.
Sept. 12: Heard closes Scottsdale dealership 2 years after moving it into a new
$12 million store.
Mid-September: GMAC, Heard try to negotiate a new floorplan. The talks fail.
Sept. 24: Heard closes all 13 remaining dealerships in Alabama, Florida, Georgia, Nevada, Tennessee and Texas.
Source: Automotive News
Whodunnit?Exactly what prompted the group's demise is unclear, but three problems played a major role:
1. GMAC yanked his floorplanning, and Heard could not finance his inventories.
2. Slumping Chevy truck sales hurt the group.
3. State regulators threatened to impose huge fines for deceptive sales practices.
These three factors caused a rapid-fire sequence of events this summer that doomed Heard's empire.
On Aug. 21, GMAC yanked Heard's floorplan line of credit over what a Heard spokesman called a "financial matter."
On Sept. 12, Heard closed his store in Scottsdale, Ariz. Two years earlier, that dealership had moved into a new $12 million store.
And just a week before he closed his remaining stores, Heard tried to negotiate a deal with GMAC to restore his floorplan. The deal fell through, said a source familiar with the situation.
Two other lenders provided floorplanning, but at least one of those yanked its financing, too, the source said. After losing the GMAC financing, Heard tried to sell his stores, said another knowledgeable source. But his financial situation was too dire, the source said. It was too late.
Champagne corksIn 2004, GM gave Heard a Dealer of the Year award and the Jack Smith Leadership Award, which honors dealers for high sales and customer satisfaction.
But Heard was notorious for business practices that generated consumer complaints, lawsuits and state investigations.
Consumer advocates in Houston were "popping champagne" over the news that Heard had shut down, says Dan Parsons, president of the Better Business Bureau of Greater Houston and South Texas.
Over the past three years, Heard's Sugar Land, Texas, store generated 144 customer complaints with the Houston BBB. Most complaints involved deceptive advertising and sales practices.
Parsons speculates that Heard's legal troubles stemming from consumer complaints led to GMAC's decision to yank financing. "I think everybody is kind of walking around the real issue, and the real issue is they got crosswise" with GMAC, Parsons said.
But GMAC declined to indicate why it yanked the floorplan. And another observer says the credit crunch and low car sales — not legal problems — caused Heard's downfall.
"Nobody should take any solace and say, 'Oh, it was just because they were bad dealers,' " said one well-informed consultant who advises big dealership groups. "It's economics."
The source says Heard's costly store renovations also may have helped sink the group. Heard built a new Scottsdale store in 2006, and he opened a new $30 million store near Tampa in 2004.
Weak economy"They had wonderful facilities that were geared toward selling a large volume of vehicles," the consultant said. "Manufacturers have been encouraging dealers — if not cajoling them — to build these mausoleums. That means there's a lot of fixed cost to put them up. And when business (decreases), you're left with the high fixed cost and not the revenue to cover your expenses."
Heard blamed his financial troubles on weak sales. In a rare interview last July, the 74-year-old entrepreneur told the Columbus, Ga., Ledger-Enquirer that he wasn't prepared for the steep downturn. "We didn't react fast enough," Heard said.
"The sky is not falling," he added, but the world had changed. "The domestic car business has all gotten pretty tough," he said. "We should have been more diversified."
One of his stores sold Cadillacs and Saabs in addition to Chevrolet vehicles. He sold no other brands.
Early in the afternoon of Sept. 24, the company's senior staffers called all of the stores' general managers and told them to shut down and send home 2,700 employees.
A brief company statement blamed rising fuel prices, a heavy portfolio of pickups and SUVs, economic recession, unfavorable local market conditions and the credit crisis.
"The company had worked to develop and implement a strategy and a course of action that would enable it to operate successfully," the company said. "However, the conditions necessary to sustain the business through the current challenges were not present."
Jeff Barton, who worked at Bill Heard Chevrolet in Sanford, Fla., told Central Florida News 13 that workers were given two hours to pack up their belongings and leave.
"Monday morning, they had a meeting saying, 'No, don't worry about it — we're staying open' " Barton told the TV station. "Tuesday, they had a meeting and said, 'Don't worry about the rumors — we're staying open.' At three o'clock today, they came in and said: 'We're closed. Get your tools and get out.' "
One open storeAs potential buyers evaluate Heard's empire, others sort through the financial wreckage. In August, the Georgia Governor's Office of Consumer Affairs filed a legal motion seeking penalties of more than $50 million for deceptive marketing and alleged signature forgery.
But the lawsuit could all fall through if the company declares bankruptcy, said agency spokesman Bill Cloud.
As of Thursday, Sept. 25, one Heard dealership remained open. A woman who answered the phone at Bill Heard Chevrolet in Sugar Land said the store was under new ownership.
She said the employees of the store don't know the name of their new owner or the new name of the dealership. When a reporter called the dealership later the same day, a woman answered with the greeting, "Chevrolet dealership."
That generic greeting may serve as the epitaph for Mr. Big Volume.