Last November, Bob Cockerham closed his Suzuki dealership in Rio Rancho, N.M. Its new-vehicle sales had plunged 60 percent from the previous year.
In January, Wells Fargo Auto Finance, the floorplan lender for Cockerham's Car World Kia dealership in Santa Fe, N.M., told him it was canceling his loan agreement. The bank said the dealership was losing too much money.
Things looked bleak. Then, in February, David Swanson rode to Cockerham's rescue.
Swanson operates Save Your Car Dealership, a Seattle company specializing in crisis management for dealerships on the brink of losing their inventory financing. Swanson, a former dealer, reviewed the financials at Cockerham's Kia store and went to work.
Under Swanson's guidance, Cockerham slashed his advertising budget by about 70 percent, to $14,000 a month. By changing vendors, Cockerham cut his data processing costs in half, to $7,750 a month, and his telephone expenses by more than 40 percent, to $4,100 a month. He switched his sales managers, who previously earned a salary along with commission, to straight commission.
None of Swanson's advice was rocket science, Cockerham concedes. He said he knew he needed to make deep cuts to survive, but could not bring himself to do it.