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Old 12-30-2008, 11:48 PM   #1
XDCX
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Default Closure of a Toyota Store in California?

As I've tracked some of the dealership closures across the country I've noticed that Northern California was one of the first areas to get hit and it's been hit the hardest.

Given that data, it's not surprising that we may see one of the first Toyota closing in the country this week in Northern California.

According to news reports, Prospect Motors in Jackson, CA is in the process of being closed down by GMAC. The dealership sells GM, Chrysler and Toyota vehicles. While there's no question that the two domestic franchises added to the dealership's woes, I'm certain that the rent factor associated with the new facility was the bigger challenge.

Here's a link to the news report: http://www.recordnet.com/apps/pbcs.d...NEWS/812240318

Another interesting tidbit from the news report - GMAC acted because the dealer was 16 days late on his mortgage payment and it is rumored that GMAC is in the process of freezing the accounts of six other dealers in the area. (The fact that GM is slow-paying Incentives while GMAC is closing stores for SOT conditions is unbelievable.)
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Old 01-02-2009, 11:43 AM   #2
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Default GMAC may take a big hit on aged inventory

When I first read about this dealer closure I was amazed that any dealer with a Toyota franchise would be having financial problems.

When I read further, it started to make sense. The dealer has a new facility with a large rent factor and they have two domestic franchises. Based on recent sales, the dealership has a 10+ month supply of new Chrysler vehicles.

Perhaps most concerning to GMAC, it appears that the dealership still had 18 2007 vehicles and 39 2008 vehicles in stock when they closed. CFC was recently discounting 2008 vehicles up to 40% off invoice to liquidate a dealer's inventory, can you imagine the hit GMAC will take when they have to sell the 2007 vehicles? What's a 2007 Pacifica or Aspen Limited worth as a percentage of invoice?
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Old 01-02-2009, 03:24 PM   #3
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Well last month a local C U told our customer that a new 2007 ASPEN $39,000.00 MSRP was only worth $22,500.00, but we still put the deal together and lost our but
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Old 01-05-2009, 10:30 AM   #4
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Well last month a local C U told our customer that a new 2007 ASPEN $39,000.00 MSRP was only worth $22,500.00, but we still put the deal together and lost our but
Wow, I bet you had to put your "selling shoes" on to keep that deal together.

With CFC's new curtailment program taking effect this month it will be interesting to see if there's an increase in the number of aged units that are being sold at deep losses just to clear them off the flooring statement.
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Old 01-05-2009, 12:20 PM   #5
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Default You don't see this everyday....

I just read that there's a community meeting planned to form a rally to support the re-opening of Prospect Motors. That's not something that you see everyday.

The community feels that the dealership has been pressured out of business by GM and GMAC and they're hoping that a rally by the community showing support for the dealership may reverse the decision.

Here's a link to the news report: http://thepinetree.net/index.php?mod...ew&ANN_id=9950
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Old 01-05-2009, 01:51 PM   #6
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Not to be negative but I wonder how many of the citizens buy their vehicles there and do not go to the next guy down the road.
But that is kinda unheard of.
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Old 01-05-2009, 06:23 PM   #7
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Not to be negative but I wonder how many of the citizens buy their vehicles there and do not go to the next guy down the road.
But that is kinda unheard of.
I think that's true of a lot of small town dealerships - loyalty to the local dealership seems to have totally faded away.

Automotive News had an interesting story about a dealer in the Los Angeles area that had been very successful selling cars to the Korean community. As I recall, the Dealer Principal was from Korea and people that lived in L.A. that had Korean ancestry felt that it was important to support the dealership.

The dealer reported that while the first generation of Korean immigrants were loyal to the dealership, the successive generations were not. They didn't care about who the dealer principal was, they were just looking for the best deal.
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Old 05-02-2013, 01:52 PM   #8
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On a different note, it's worth repeating that Chrysler's top volume retail dealership for several years was Dave Smith Motors in Kellogg, ID. Kellogg only has a population of 2,105 people...
I'm not familiar with the Idaho store, but reminded me of a guy I went through GM's Dealer Candidate School with back in 1983, by the name of Frank Halvorson from Jackson CA, a small town on the western edge of the Sierra Nevada mountains in the old gold rush country about 60 miles southwest of Lake Tahoe. They were the largest volume Chevy dealership in the US at that time, handling many, many thousands of fleet deliveries for companies all over the country, out of an old "middle of downtown" 1950's building in a town of less than 3,000 population. As I recall, Frank said they had 80 employees that did nothing but paperwork, make readies, and transport for the fleet deliveries. Haven't talked to him in years, and seeing this thread I googled his store and was saddened to see that he had been forced to close down in December of 2008 when GMAC pulled his floorplan after he was 16 days late on his "FACILITY" payment. He had given in to pressure from GM to build a big new branded dealership 20 months prior to the credit crunch. As you can imagine, such a business model (thousands of units, at $200-300 net per unit, required a massive amount of floorplan capital to function, and he was unable to obtain another source at that time. His brother David is still in business in a Chevy store in Modesto, CA and said he was able to survive because he was in an older building that was paid for.
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Old 05-02-2013, 04:14 PM   #9
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I'm not familiar with the Idaho store, but reminded me of a guy I went through GM's Dealer Candidate School with back in 1983, by the name of Frank Halvorson from Jackson CA, a small town on the western edge of the Sierra Nevada mountains in the old gold rush country about 60 miles southwest of Lake Tahoe. They were the largest volume Chevy dealership in the US at that time, handling many, many thousands of fleet deliveries for companies all over the country, out of an old "middle of downtown" 1950's building in a town of less than 3,000 population. As I recall, Frank said they had 80 employees that did nothing but paperwork, make readies, and transport for the fleet deliveries. Haven't talked to him in years, and seeing this thread I googled his store and was saddened to see that he had been forced to close down in December of 2008 when GMAC pulled his floorplan after he was 16 days late on his "FACILITY" payment. He had given in to pressure from GM to build a big new branded dealership 20 months prior to the credit crunch. As you can imagine, such a business model (thousands of units, at $200-300 net per unit, required a massive amount of floorplan capital to function, and he was unable to obtain another source at that time. His brother David is still in business in a Chevy store in Modesto, CA and said he was able to survive because he was in an older building that was paid for.
https://www.youtube.com/watch?v=E1nwJZtWpdU

Watch this and tell me there should not be outrage. DealerEx I had to look for and find this, it made me cry that Sunday morning. Little did I know I would be with him, without a dealership, less than 6 months later.
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Old 05-07-2013, 03:06 PM   #10
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I copied the above two posts from another thread since they pertained to Prospect Motors and added relevant information.

When I review the events surrounding the closure of Prospect Motors I'm still saddened/angered. A dealer likely invests all of the money he has building a new facility for his OEMs and then gets stuffed with a 10 month supply of slow selling vehicles. GM adds fuel to the fire by slow-paying Dealer Incentives and GMAC pulls the trigger when the dealer was 16 days late on his mortgage payment. Hell, even if the dealer managed to dodge the first bullet I'm sure GMAC's accelerated curtailment schedule would have been the next shot that would have wiped him out.

I need to make a road trip to Seattle later this summer and hope to take a detour from I-5 to see whatever happened to the dealership facility. Based on a quick satellite review from Google Maps it appears the facility is still empty.
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Old 05-07-2013, 03:34 PM   #11
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Based on a quick satellite review from Google Maps it appears the facility is still empty.
Here's the most recent satellite image from Google Maps:


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Old 05-07-2013, 09:54 PM   #12
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I copied the above two posts from another thread since they pertained to Prospect Motors and added relevant information.

When I review the events surrounding the closure of Prospect Motors I'm still saddened/angered. A dealer likely invests all of the money he has building a new facility for his OEMs and then gets stuffed with a 10 month supply of slow selling vehicles. GM adds fuel to the fire by slow-paying Dealer Incentives and GMAC pulls the trigger when the dealer was 16 days late on his mortgage payment. Hell, even if the dealer managed to dodge the first bullet I'm sure GMAC's accelerated curtailment schedule would have been the next shot that would have wiped him out.

I need to make a road trip to Seattle later this summer and hope to take a detour from I-5 to see whatever happened to the dealership facility. Based on a quick satellite review from Google Maps it appears the facility is still empty.
We can look back now, at that time in 2008, as the market crashed and the credit market dried up...with sales plummeting as much as 50%, and every dealer in the country sitting on record inventories and easily forget that the factory had been pressuring dealers to "invest in bricks and mortar" for several years...even going out and demanding that the dealers present them with blueprints and building plans or have their VPA objectives raised to where they couldnt possibly meet them. And then in the early months of 2009being pressured by the factory to take even more uneeded inventory (as in Jim Press's famous "we know who you are and where you live" tirade) all done while they knew that they were looking at bankruptcy themselves. I'd be willing to bet that Frank was required to sign an "unconditional personal guarantee" on his loans from GMAC as well as his floorplan just like CFC required in their revised Master Loan Agreement. That might explain how quickly they pounced on his dealership. They knew he had a considerable number of unsold previous and 2 year old models that they would take a beating on and that the industry as a whole was headed over the cliff they wanted to jump in while the assets were still there to cover them.
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Old 05-13-2013, 03:35 PM   #13
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I'd be willing to bet that Frank was required to sign an "unconditional personal guarantee" on his loans from GMAC as well as his floorplan just like CFC required in their revised Master Loan Agreement. That might explain how quickly they pounced on his dealership. They knew he had a considerable number of unsold previous and 2 year old models that they would take a beating on and that the industry as a whole was headed over the cliff they wanted to jump in while the assets were still there to cover them.
I agree 100%.

My bet is GMAC knew they were exposed to a lot of aged new car inventory that couldn't be returned to the factories. GMAC likely decided that their "first loss was their best loss" so they seized the opportunity to take control of the dealership and begin the liquidation process while wholesale prices were still relatively high.

I wonder how many GM dealers were forced into liquidation because GM decided to slow-pay their incentives?
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