John Isgett is president of Raceway Automotive Group in east-central South Carolina. The company operates three new-car stores: a Ford dealership in Darlington, a Chevrolet-Buick-Pontiac-GMC outlet in Lake City and a Chrysler-Jeep-Dodge store in Hartsville. Raceway also owns four preowned vehicle dealerships.
The Hartsville store received a letter last week from Chrysler LLC saying it was one of 789 dealerships whose franchises Chrysler wants to pull on June 9. Isgett, 40, received another letter the next day from General Motors saying his GM dealership was one of the 1,124 targeted for termination by October 2010.
Isgett will blog regularly for Automotive News as he seeks to wind down his Chrysler dealership. First, he has to get rid of the 30 new Chrysler vehicles on his lot.
It's Thursday morning, and I'm in my office at our Ford location. My service manager comes to me and asks, did I get the letter from Chrysler? I honestly for the moment had no idea what he was referring to.
He said a nearby dealership had just gotten a letter saying it was being terminated. I had not really thought much about Chryslers dealer consolidation effort, as I never really thought we would be considered. Though new vehicle sales were not where they should be, they werent for anyone in the nation.
Curious, I traveled the 10 miles to our Chrysler-Jeep-Dodge store, and there it was: the overnight envelope. I opened and read it and was quite taken aback at the direct approach.
More importantly, I was taken aback at how the Chrysler administrative team had pushed in conference calls that we must all pull together and take more inventory to keep Chrysler alive. Today, they are saying, Sorry. You're out. And all that extra inventory you took? It's yours -- if the bankruptcy judge permits us to get away with it. Fortunately for us, we never agreed to take all of the allocation, as it just didn't make business sense for us.
I then took the letter to the conference room, called my key managers in and after a few moments of truly thinking it through, asked them all, "How are we negatively impacted by this letter?"
We all began to offer our opinions, one at a time. Darren in fixed operations said warranty was now only 15 to 18 percent of our business. Bert in sales said as much as he liked the "new" product, we made all of our money in today's market with certified preowned and other used models. The loss of the expense in the new vehicle line could only help. Reesie in accounting said without the multiple franchise fees we pay every month, our bottom line could do nothing but increase.
With this, we committed as a team to move forward in doing what we all do best, selling cars. New or used, we're in the transportation business, not the franchise business. Finding the best value in the market for our customers is our job.
Service and parts? We will maintain them both. We won't be able to do warranty, but with the reduction of expenses, we feel we could easily become even more competitive in the marketplace, increasing our customer-pay business to easily absorb the warranty income loss.
We ended agreeing that things happen for a reason. We'll pull through offering our customers the best value in transportation, but now with a margin that we all can live with.