Ailing car dealers frustrated with inaction on deal

December 12, 2008|By Stephen Kiehl | Stephen Kiehl,stephen.kiehl@baltsun.com

Car dealers say they are frustrated and disappointed that Congress has failed to pass a $14 billion loan package that is intended to save Chrysler and General Motors from bankruptcy, and they warn that the impact on the economy would be severe if those companies are allowed to fail.

In Maryland, about 26,000 people are employed at the state's 340 auto dealerships, which contribute significantly to local philanthropy, from Little League to the state's Teacher of the Year Award. All of that is at risk, dealers said. Between 5,000 and 6,000 dealer employees could lose their jobs in Maryland if GM and Chrysler fail, dealer representatives said.

"If I don't have a product to sell, I hurt myself and the community," said John Miller, co-owner of Miller Bros. Chevrolet and Cadillac in Ellicott City, a franchise that has been in the family - and in Howard County - since 1928. "The legislature is being very conservative, and as a citizen I think they should be, but I don't know if they understand what the automotive industry means in terms of jobs and health care and the whole GDP of the country. It's very, very big."

Dealers directed their ire at the Republican leadership in the Senate, which has balked at approving the loan bill that passed the House on Wednesday night. Republicans said the bill, drafted by the White House and congressional Democrats, didn't demand the fundamental restructuring necessary to return the automakers to profitability.

Dealers said their cars are now of higher quality than ever, but customers are wary. The rescue package could have restored some confidence but has failed even though it was less sweeping than the bank bailout.

"I'm greatly disappointed in the Republican Party in how they're handling this. To me, it's atrocious," said Bob Frankel, owner of the Frankel Automotive Group, which has four GM franchises in the Baltimore region. He said he believes that GM and Chrysler can hold out until Jan. 20, when President-elect Barack Obama takes office, and that a bill would pass at that point.

Employees of the automakers were just as upset. Wanda Hopkins, a 54-year-old assembly line worker at the GM plant in Newport, Del., is just a year away from reaching three decades with the company, when she would qualify for a pension. She is worried she won't make it.

"If this falls through, I will have nothing," said Hopkins, who lives in Pasadena and is angry with Senate Republicans. "It's a shame they don't help. They didn't mind handing out money to the big banks without any questions. Nobody had to make concessions, nobody had to make pay cuts."

Fourteen dealerships have closed this year in Maryland, including Towson Ford, which had been around for more than 50 years, and Dulaney Lincoln Mercury. In St. Mary's County, the nation's second-oldest, family-owned GM dealership closed last month.

"Outside of Baltimore and Washington, the biggest employer in most towns is one of the car dealerships," said Peter Kitzmiller, president of the Maryland Automobile Dealers Association. "They're also the biggest contributor to local charities."

Dealers in the state have contributed more than $350,000 to the Maryland Shock Trauma Center in the past five years and are the primary sponsors of the Maryland Teacher of the Year Award. But the downturn in sales - off some 30 percent or more compared with last year - threatens charitable donations, advertising in local media and employees.

David Williams, president of Williams Family Automotive, which has Chevrolet and Pontiac-Buick-GMC dealerships in Elkton, said he used to sell 3,000 new cars a year. Now it's about 1,700. He has had to let go five of his 90-some employees.

"This is very disheartening," said Williams, who believes the bill in Congress has fallen victim to politics. "As fragile as our economy is right now, a [GM bankruptcy] could push it into a depression unlike anything we've seen since the Thirties."

Dealers said sales have nearly stalled as Congress debated the loan package. For customers to feel comfortable with purchasing cars from American automakers, the bill must pass, dealers said.

"It's a shame that all this posturing puts everyone into a state of flux," said Sam Weaver, owner and vice president of Chevy Chase Chevrolet and Chevy Chase Acura in Bethesda. "Consumer confidence is terrible right now. ... Until there's a resolution, that will be very difficult to overcome."

However, he added, "There's never been a better time to buy a car."

Baltimore Sun reporter Scott Calvert contributed to this article.

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