Since 1945, Al Long Ford in suburban Detroit had done a brisk business. But last month, owner Tarik Daoud took down the Ford brand blue oval and turned the dealership into a used-car lot.
"We are not losing hundreds of thousands of dollars," Daoud told Automotive News. "We are almost breaking even. We are not closing down out of desperation. But we need to close before it is too late."
Detroit 3 dealers, already weakened by years of eroding market share, got socked in 2008 by a brutal sales slump and a credit crunch. The dire economy is accelerating — and sometimes distorting — the domestic automakers' retail consolidation plans.
But not just Detroit 3 dealers are plagued by depressed sales, frozen credit and reduced profitability. As domestic and import-brand dealers gather in New Orleans this week for the annual convention of the National Automobile Dealers Association, they are less likely to be in a mood to party in the French Quarter — and more likely to swap horror stories.
This special section of Automotive News examines what dealers are doing to survive tough times: slashing costs and debt; looking for new ways to profit from service and parts, finance and insurance, and used-vehicle sales — and for dealers such as Daoud, deciding whether they want to stay in the new-car business at all.
In the Detroit area, five Ford dealers contributed undisclosed sums to help Ford Motor Co. buy out Daoud. But many other dealers weren't so fortunate when they closed.
Last year, about 900 franchised dealerships — two-thirds of them Detroit 3 stores — closed, NADA estimates. This year, NADA expects 1,100 dealerships to close, with more than 80 percent of them holding General Motors, Ford Motor or Chrysler LLC franchises.
Mark Johnson, an industry consultant in Seattle who specializes in dealership acquisitions, says many domestic brand dealers are "in the late planning stage of a resignation."
"Dealers are jockeying to get out of leases and mortgages and to try to stem their losses," Johnson says. "They are calling their competitors, looking to sell a brand off or shut it down and help place employees. They're trying to change mortgages to interest-only and trying to get out of personal guarantees on loans."