Monday, October 06, 2008

Major US car dealership goes bust: sign of things to come?

Can this be the first domino in an auto credit collapse? Bill Heard dealerships took risky road

Nobody sold more cars in Georgia than Bill Heard. He was the nation’s 11th-biggest automobile dealer, the world’s largest Chevrolet retailer. He was, as his ubiquitous advertisements put it, “Mr. Big Volume.”
No credit? No problem.
All loan applications accepted.
It’s all about the payments.
These advertising slogans became tenets that helped guide Columbus-based Bill Heard Enterprises as it grew to 15 dealerships in seven states, including four in metro Atlanta, with sales topping $2 billion a year. And, ultimately, they became millstones that hastened the firm’s demise.
Heard Enterprises abruptly shut down all its dealerships Wednesday and laid off its 2,700 employees.
By Thursday morning, a finance company was hauling away Heard’s unsold vehicles, an ironic outcome for a dealer who took pride in always being able to move cars off the lots.

To be fair, one company failing isn't necessarily a portent of doom. On the other hand, new car sales is a tough gig, with the Detroit 3 perenially locked in a race to the bottom. A quick perusal of car dealer ads in the newspaper, not to mention the intrusive and annoying radio and TV ads makes it clear that the "subprime" auto credit business is choked with competitors vying for the business of people with "bad credit or no credit."

There's also been some talk and rumbling, for what it's worth, that auto credit is the next big looming crisis. If people can't pay for their homes, can we expect them to pay for their vehicles?

To be continued...

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