Dealer closes; town feels pain

By Alexandra Berzon

Tuesday, Dec. 2, 2008 | 2 a.m.

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.”