The Trials of the Auto Dealer Kathleen SponsellerJohn Stanovich Josh SheppardJared Simon

Overview Reasons auto industry is slowing –Tight credit –Rising unemployment –Home foreclosures –Widespread saving of discretionary income GM dealers started offering no-interest loans

Overview Auto dealers closing their doors Domestic dealerships are having problems Recession hit foreign makers as well as domestic makers –Toyota 13% –Honda 5.4% –Nissan 9.1%

Johnny Watkins Grew up in the 60’s on Kentucky cattle farm Attended Eastern Kentucky University Took job at Chevrolet dealership in 1973 –In 1977, he bought a share of that dealership By 1997 he had acquired 2 dealerships –Chrysler –Buick-Pontiac-GMC

Johnny Watkins His dealerships thrived in the 90’s Became #2 Chrysler dealer in Kentucky 275 acre farm Beach Condo in Florida Net worth of $3.5 million

Watkins’ Decline GM loses market share Domestic manufacturers offer incentives to dealerships Dumped money in advertising Stowed unsold pickups in nearby fields Both dealerships losing $40k per month Attempts to sell business, nobody’s buying

Elmer Gambrel Kentucky Car Dealership owner 1967 – became the local Toyota dealer Received criticism for selling Japanese made cars in rural Kentucky Later purchased a Chevy-Cadillac- Oldsmobile dealership (General Motors) Very successful

Elmer Gambrel 1986 – Toyota assembly plant built 90 miles away from dealership –Helped win over many Kentucky drivers 1991 – Elmer passed away, his son Larry took over his dealerships 2005 – As GM began losing market share, Larry decided to sell the GM dealership

Elmer Gambrel Began to focus solely on his Toyota dealership As economy has weakened, began cutting expenses such as advertising and maintenance Has felt the effects of the economy –Too many cars on his lot –Has fared much better than American made car dealerships

Today Mr. Gambrel sells only Toyota –Sold his Cadillac and Chevy dealerships for $500,000 in 2006 –Cut costs on Advertising, maintenance, and other services –Has about 125 new vehicles on his lot, about 50 more than he wants –Sales were down about 15% for the year, however they could have been much worse

Today Mr. Watkins was forced to sell his condo in Florida and close the doors on his dealerships –He currently has no job, and lives in a house that the bank currently owns, his stay is only temporary –Lives off of his wife’s pension, she is a school administrator

Conclusion The large amount of domestic dealerships, and no increase in demand has caused a lot of dealerships to close up The fewer number of foreign dealerships have survived, even with fewer sales High gas prices and the slowing economy have made people turn to more fuel efficient vehicles

Conclusion Chrysler has been hurt due to their line of cars containing only one small car and one hybrid In 2008, about 900 dealerships closed, roughly 86% of them were domestic make

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