Mike Kahn ran the fastest-growing U.S. dealership group in 2007, rocketing up Automotive News' annual ranking of the country's largest auto retailers. But last week Kahn shut down the last of his former seven-store operation — a victim of the nationwide floorplan crisis, he says.
"I am no longer in the car business," says Kahn, president of Superior Automotive Group of Newport Beach, Calif.
On Tuesday, Feb. 24, Kahn closed five dealerships — three Nissan stores in the Los Angeles area, one in Fremont, Calif., and a Toyota store in Oakland, Calif., — after Nissan Motor Acceptance Corp. cut off floorplanning. Three hundred employees were terminated.
The company closed a Chrysler-Jeep-Dodge store in the Los Angeles area in early February. In December, Kahn sold a Toyota store in San Juan Capistrano, Calif.
"The sad part of this whole thing is the Oakland Toyota store was just opened last week," says the 48-year-old former amateur boxer.
Superior Toyota of Oakland has five floors and a four-story glass showroom. Nissan Motor Acceptance Corp. lent Kahn money to build the $35 million, 200,000-square-foot store after Toyota Financial Services turned him down, says Kahn.
Kahn won rights to the Toyota franchise in Oakland after a dispute with the automaker. In 2006, when Kahn tried to buy Ron Goode Toyota of Alameda in the San Francisco Bay Area, Toyota refused to sell it. Kahn sued Toyota, and the two sides settled out of court.
Kahn got the Alameda franchise and moved it to a new building on six acres along Interstate 880 in Oakland. Kahn also received the San Juan Capistrano Toyota store and a cash award as part of the settlement.
Kahn's dealership group moved up more places than any other company on Automotive News' latest ranking of the country's largest auto retailers. A 52.9 percent increase in new retail sales to 10,695 units in 2007 boosted Superior from 106th place to 73rd on the list of the top 125 dealership groups.
The group was born in 2001 when Kahn bought a Nissan store in suburban Los Angeles. Did he expand too fast?
"No," he says. "At the time we did all of this there was plenty of financing, the economy was described as unbelievable, and money was cheap, too."
Kahn says a good relationship with Nissan Motor Acceptance came apart with the market downturn. He says Nissan asked him last fall to sell the Toyota store in San Juan Capistrano and close the Chrysler dealership. He sold the Toyota store in December and closed the Chrysler store in February. Kahn says he also paid Nissan $30 million he owed on the San Juan Capistrano operation.
"I figured if I paid off Nissan they would help me make it through this storm," he says. But "they said, 'We can't get money.' "
On Monday, Feb. 23, the California New Car Dealers Association sent a letter to U.S. Treasury Secretary Timothy Geithner deploring the "harsh new policies" instituted by several floorplan lenders that are "draining dealers of much needed working capital."
Kahn, a Southern California native, says he has soured on automakers.
"When times are good they act like your best friend," he says. "When things go the other way, nobody will talk to me. It tells you how disloyal the manufacturers are."
Fred Standish, spokesman for Nissan North America in Franklin, Tenn., confirms that Nissan Motor Acceptance had cut off floorplanning to Kahn's four Nissan stores and one Toyota dealership. He declines to discuss details.
"Dealers are under a lot of stress right now," Standish says. "Most disputes we are able to resolve. Sometimes the discussions fail to produce a resolution. We have to protect our brand."
Kahn, who is also in the real estate business, says he's through with cars. But he admits things could change. He says Toyota called him last week about financing the Oakland store. And he says the city of Oakland "said they might do something."