The rise of Rahim Hassanally, a prominent young dealer in California, may be coming to a bitter end, after seven of his dealerships abruptly shuttered following months of financial woes.
The single store of Momentum Auto Group that remains open after the November closures, sources say, is Momentum Chevrolet, which is majority-owned by General Motors.
The dealership group, with stores in Fairfield, San Jose and Vallejo in the San Francisco Bay area, ranked 124th on Automotive News' list of the Top 150 Dealership Groups in the U.S. last year, with 7,753 new-vehicle and 4,749 used-vehicle retail sales in 2017.
The dealership group's spiral — fueled by financial troubles caused by California wildfires, slow permits on a facility upgrade, among other things — is a blow to Hassanally, a rising star in the automotive retail world. Hassanally was featured in Automotive News' 40 Under 40 listing in 2013 and is on the American International Automobile Dealers Association's board.
Momentum's management team is already evaluating bidders for the group, said Christian Scali, managing partner at law firm Scali Rasmussen in Los Angeles, speaking on behalf of Momentum's management team. Court documents indicate the auto group had entered into an agreement with the Dave Cantin Group to sell its dealerships.
The dealership group was "hit hard by the many challenges over the course of the past year," such as the California wildfires, the bankruptcy of one of its primary lenders and delays in completing a facility upgrade at its Toyota dealership, the largest store in the group, Scali told Automotive News.
Momentum Auto Group, in a news release issued after that interview, blamed the temporary closure mainly on revenue losses stemming from the Camp Fire in Butte County, Calif. The release indicated that poor air quality impacted work that could be done by its staff and also kept shoppers away. Momentum plans to transition to new ownership, though it gave no details on when it would happen or with whom.
The group also became entangled in several lawsuits in recent weeks. BBVA Compass and BMO Harris Bank sued over breach of contracts in Solano County Superior Court this month. BBVA Compass also sued over an alleged violation of a floorplan agreement.
The store closures come on the heels of a Nov. 14 ruling in the BBVA Compass case that prohibits some of the dealerships from selling vehicles.
A lawyer representing BBVA Compass and a spokesman for BMO Harris Bank declined to comment.