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twitterTHE ECONOMY:
Dealer closes; town feels pain
In small Nevada burgs, car stores are big businesses
Chris Morris
Tue, Dec 2, 2008 (2 a.m.)
Bosch Motors, a family-owned General Motors dealership that has been in Winnemucca for decades, recently filed for bankruptcy and started selling only used cars.
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Sun Archives
- Why should Nevada care about the automakers? (11-21-2008)
About a month and a half ago, Eric Grimes was at his house on a Saturday when he received a strange, anonymous phone call: Thought you’d want to know that Jetway Chevrolet is closing down, the caller said before abruptly hanging up.
Grimes, the director of economic development for Fallon, thought the caller had to be wrong. Jetway was a locally owned fixture for at least 10 years in this community of 7,900 people about 60 miles east of Reno. Jetway constantly donated money to the Chamber of Commerce, the Boys & Girls Club, the Rotary. At its height, it did $12 million in business a year and employed 11 people, Grimes said.
“I was in absolute shock — and then denial,” Grimes recalled. “I thought, ‘You’ve got to be kidding.’ But then that Monday I drove over and the doors were closed and they had started hauling off vehicles.”
It’s a scene taking place across the country as dealerships abruptly close, succumbing to a tight credit market that has dried up car financing and low consumer trust in Detroit’s big three auto companies, whose executives will be back before Congress today asking to be bailed out by taxpayers.
In Nevada, four dealerships have closed or stopped selling new cars, including two in the Las Vegas area and one in Winnemucca. Through September, auto sales in the state were down 17.5 percent for the year.
In small towns such as Fallon and Winnemucca, what’s lost is often one of the most visible and active companies in the community and one of the top sources of sales tax revenue.
In Fallon, sales at Jetway and the other dealership in town made up 9.4 percent of Churchhill County’s sales tax revenue in 2008 through September, down from 19.6 percent the previous year. Sales tax collected on cars sold in Churchill County was down 29.5 percent in that time — a loss of nearly $4 million for community coffers. And that’s before Jetway closed its doors.
“We’re a small community, so if we have one business open or close, it has a huge impact,” Grimes said. Fallon also recently lost an RV and boat dealership, Grimes said.
Plus, the effect on a small community goes beyond just revenue and employment, said Joe Locurto, rural economic development director for the Nevada Economic Development Commission.
“Having an auto dealership, especially one of the Big Three, it’s a big deal,” Locurto said. “It’s a sign that the community has an infrastructure that’s capable of supporting itself.”
In the gold mining town of Winnemucca, the drama playing out at one dealership is lot more public than Jetway’s sudden shutdown. A few weeks ago, Bosch Motors, a General Motors dealership and the town’s largest, filed for bankruptcy and started selling only used cars.
Owner Lee Bosch, who took over the dealership from his father and grandfather, has worked there for 24 years. Community leaders recall that at the county fair, Bosch has for years given away buckles to the rodeo winners.
As rumors in town flew, Bosch took out an ad in the local paper, the Humboldt Sun: “Bosch Motors Inc is NOT CLOSING! We will continue to serve the community with our friendly and efficient service!”
Bosch wouldn’t speak to the Sun, but he recently told the Northern Nevada Business Weekly he had to end his franchise agreement with General Motors because GMAC, General Motors’ lending arm, had pulled back car financing.
“It’s the only choice I had,” Bosch told the Business Weekly. “We couldn’t get anybody financed. We couldn’t get deals bought or get anybody qualified. We were turning down three to four deals a day because GMAC wouldn’t finance them.”
Thanks to the high price of gold, Winnemucca had, until recently, largely escaped much of the economic downturn felt in the rest of the country. Now, the effect is inescapable.
“This is the influence of the outside world,” said Bill Sims, director of economic development for Winnemucca. “This had nothing to do with our local economy.”
The troubles at Bosch and other dealers have reverberated in town as a sign that even Winnemucca is not immune.
“People are watching the news every night, and hearing about the automakers asking for money makes them itchy,” said Jason Blatzheim, sales manager at DeLong Ford Mercury in Winnemucca. Buyers are wary of purchasing cars from automakers that could go bankrupt.
Blatzheim said income at his dealership is up because of used car sales, even as new car sales are down.
Tom Koebele, finance manager for Liberty Chrysler in Winnemucca, said sales of new cars at his dealership are now down 75 percent.
Finding financing for car sales has become a chore, a constant fight, Koebele said. Four of the banks Liberty used to depend on aren’t in business or aren’t making loans.
To compensate for the decline in revenue, Liberty is trying to cut costs wherever it can. The company recently turned the temperature gauge down to save money on heat, and it hasn’t filled several positions after employees left.
“People in Winnemucca are still employed, but everybody is scared,” Koebele said. “They don’t know what’s going on.”
Discussion: 14 comments so far…
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It's not surprising that dealerships are closing down, or are ceasing to sell new cars. Not so much because of the economy, but because of the glut of affordable used cars vs. high-priced new cars that Detroit can't unload.
I seriously doubt anyone is NOT buying a big-3 product because of the risk of bankruptcy. It's just the fact that their vehicles are WAY overpriced. For a fraction of the price, you can get a late-model version of the same brand-new vehicle they want to sell you for 2x-3x the price of the used one. Combine that with the fact that dealers can not only get people approved easier for lesser-priced used cars, but in turn also focus more on selling those used cars first because they NEED to get rid of those used ones before they depreciate too much... And well, you just get a double penalty to the automakers.
Dealers need to make money, it's their business. So if pushing reasonably priced used cars gets them their profits, they're going to do it. Between all the recent spike in repossessions and the tens of thousands of rental cars that are retired from service and placed on the selling block each year, the competition of used cars against new ones is overwhelming. How could the Big-3 not have seen this coming? Or were they just hoping for infinite credit to be handed out at every turn, or in the worst-case scenario, did they just figure they'd let the dealers worry about the problem?
I find it hard to conjur any pity or sympathy at all for car dealers/sales people. They never gave a thought to our feelings when they were screwing us at every turn - buying a car and having to deal with these vultures is something I do not miss nor do I look forward to it ever.
Dam....they are leaving before they can pay an increase in state Nevada businesses taxes.
It figures.........
The only reason why we have car dealerships is because state law outlaws us citizens from buying cars any other way. Why can't we buy from Wal-Mart or direct from factory?
All the Nevada government did was create a job that wouldnt exist and force everyone to pay higher prices for automobiles.
Azsk8fan, it wasn't the dealer that was screwing you, it was the state!
Sadly, the loss of so many small businesses is detrimental to us all. The sales and service workers will not be able to frequent restuarants, retail stores, or even pay rent. This makes the recession - bad enough as it is - worse.
The solution is to raise taxes on businesses.
Yes, a business tax is needed - according to Chancelor Rogers it is likely the only way that UNLV will survive as a meaningful institution which is of the caliber of places in nearby states. Ok, tell the gov to get on board!
Yes....those pesky private jobs are getting in the way of Lord Roger's dreams.
Sorry to disagree KDR - name me one car salesperson who is honest - why is buying a car right up there with getting married and buying a house on the list of most stressful things to do - it's because car salespeople are slimebuckets who try to screw the customer every chance they get with all their double-talk and fast talk - nothing irritates me more than when they want to know what kind of 'monthly payment' I'm looking for.......I tell them just give me the bottom line price and then I'll let you know if I can afford it or not - I'm not gonna tell them I am willing to pay $300 a month for car so they can take what might have been a $250.00 month car and turn it into a $300 month car....it's just a game trying to stay one step ahead of these crooks.....this is not about the State - it's about the proverbial 'used car' salesperson....there's a real reason why that phrase was coined.
Maybe and If these big three get bailed out they'll start making cars and trucks that don't break down soon and keep the parts and mechanics in big buisness....that's the problem....they don't last then it cost you to get them fixed...We now drive Toyotas....they last three times as long.....100,000 plus and nothing has gone wrong....had a chev and at 40,000 major problems
I will never feel sorry for "most" of those SOB'S...Sales and above! They know that most people need a vehicle and they know that they are screwing the people that need the cars the most. And I agree...you never can get a straight answer with any of the sales and management and staff above. So I say..Let them lose their jobs! I will finally be able to see what goes around comes around!
But with that said...I do feel sorry for all of those who answer the phones...who clean the cars, fix the cars,you get the idea..."the honest folks. The folks like you and me who come and and try to give an honest 8 or 9 hours and go home to our families. But just like the lessons we learned in school, it is the action of a few that screw-up the rest, the majority of the time. And in this case, it will be the same again.
So last year...when I turned in my 2004 Malibu due to medical reasons and it took them over 6 months to get it...well HAHA to all you of a***Holes! I hope you all learn what it feels like not to have a paycheck and wonder if you will get all of your bills paid on time. And if you are "lucky" maybe you will get to keep your car another 6 months before it gets towed away.
And if I remember Vegas weather right...it will be about June then and it will be getting nice and hot! Just perfect for riding the bus!
Let me know if you need help with the schedules.
(Removed by the site staff)
Well my last comment got deleted, I guess my response was a little foul. But not all salespeople are nothing but a bunch of S.O.B's, we have real families with real problems just like everybody else. So when we all get catergorized as S.O.B's that is a real ignorant statement. With all the computer access that the consumer has today as to new and used car values and to their own credit scores how can any consumer allow themselves to not get a great car deal. We as salespeople work 10-12 hours a day with no guarantee of an income, so if we seem eager to help you, why dont you try being honest and upfront with us and stop treating us like we are the black plague. The average salesperson sells between 8-10 cars a month, which is basically around 96-120 a year, so who do you think is more knowledgable about what is what. If you tell us what you want and we dont deliver then leave, yes there are bad employees in every business. You mean to tell me that nobody outside of a car salesman ever treated you poorly?? Why is it that the average markup on furniture is 300%, yes it's 300%!!! But you hug the guy at Ashley for ripping your head off, Walmart's average markup is 28%. When was the last time you dickered with the cashier on your purchase? The average markup on a mid level new vehicle today is 3%. So why is it that all consumers want to call us full commission salespeople scum and leaches?? Why are we labeled for trying to make a couple of dollars? Do any of you out there work for free?? I doubt it! So try a little honesty next time you are on the car lot, it's O.K. to say we are her cause we need a car. It's also o.k. to let your salesperson know that you've researched your trade and the invoice value of our vehicle. Honesty goes a long,long way, and until you try it and stop crucifying us then it's more your own fault for making the last stupid decision than it is the salesmans. Shame on you if you dont do your research because IT IS AVAILABLE. I'm proud of who I am and my family deserves to have a roof over their heads also.