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ARKANSAS
Sylvia Curry, co-owner, Jacsil Motors, Pine Bluff, Ark.:
“This is our 20th year in business.
“We carry about 75 cars on our lot. That’s about the same as this time last year.
“Our business this year is down about 56 percent. We haven’t done anything different from previous years.
“It’s the economy. Every manufacturer in town has either had layoffs or they’ve cut workers’ hours.
“I do all of my financing through Credit Acceptance. Two years ago, we stopped doing any in-house financing.
“Other finance companies expect you to endorse paper - guaranteeing it - and we’re just not going to do it.
“About 30 percent of our business is cash sales.
“We carry a higher percentage of cars than trucks and SUVs. It’s about 75 to 25 (ratio). We carry about 60 percent domestic to 40 percent import.
“We get our inventory from a lot of different places, from auctions, new-car dealer trade-ins, individual buys and we’ll sell trade-ins we get here.
“Dealer trades are harder to come by and market prices are up at auction because of the scarcity of used cars. I think it’s because of a lack of new-car sales.
“We also do reconditioning on our vehicles before they go out on the lot. It’s about the same amount that we did last year. We do not have our own service shop. We farm out the recon work.
“Our advertising is through television and newspapers.
“We have a Web site and we do some Internet sales. But they are sporadic. Internet sales are better in the metropolitan areas.
“Our average price overall is about $7,000. It’s about the same as last year.
“We sold a 2004 Hyundai Santa Fe yesterday for $8,995. It had 95,000 miles on it.
“We’re just hanging in here. We don’t floorplan, so we don’t have the banks breathing down our necks. We also have paid for a property over the years, so we don’t have high overhead monthly bills.
“I don’t know how these dealers who have these $10,000, $20,000 to $30,000 a month floor plans are doing it.”
MICHIGAN
Jeff Braatz, owner, Paradise Motors, Lansing, Mich.:
“I’ve been in business for 25 years.
“We’re carrying about 85 units right now.
“Last year, I had three locations and carried 220 cars. The (closing of those two lots) was due to the lender pullout.
“As an independent, I had Capital One, Citibank and Wells Fargo – all the big boys, so to speak. So when they left, I had to change my business model.
“Now we’re doing buy-here, pay-here and Credit Acceptance Corp. We still have a couple of credit unions, a little bit of Chase business and a little bit from AmeriCredit.
“I used to tilt more toward subprime - all those lenders - but now we’re doing in-house financing and Credit Acceptance.
“If you’re an independent who doesn’t have some kind of in-house program, I don’t know how you’re going to make it. It’s going to be tough.
“I obtain my vehicles through private capital.
“We were on a high here in Michigan (when business was good). I’m 53 and had friends who walked out of high school, got a job at General Motors Corp. and lived the dream. They got the cottage and two cars.
“I think a big part of the problem in Michigan is that we’re becoming like the rest of the country regarding employment. Just in Lansing, we used to have 22,000 GM employees making 22 bucks an hour. We had guys sweeping floors - who couldn’t read and write - making $80,000 a year.
“At the end of the day, that was kind of a Disneyland, fantasy land climate. In some people’s minds, it became a birthright.
“With the (changes in the auto industry) that’s all changed.
“What I tell dealers is that you have to figure out how to sell a car for $300 to $350 a month to stay in business and make a profit.
“Because now, you have to figure out how sell something to people who now make 16 bucks an hour and still make a profit.
“A lot of the problem is in our own heads. People don’t want to change. They want to keep on thinking that (big-paying manufacturing jobs) are going to come back. Well, it’s never going to be there again.
“So now I’m at one location and I’m selling about 40-plus cars per month – about 42 to 43 a month since March.
“That’s really my model going forward, because I’ve only got so much capital.
“I tell guys, ‘you have to take a clean sheet of paper and you have to start over. What you did last year doesn’t matter.’
“You have to write down, here’s how much gross I anticipate, here’s the expenses and then see if there’s anything left.
“For example, my model before was carrying 25 to 26 cars per store. So actually, I’m more profitable having one store selling 40 cars than I was when I had three stores selling 70 to 80 cars.
“I was able to split some of the overhead up when I had three locations, but if you think about the inventory and the depreciation we suffered last fall, that was unprecedented.
“Back then, there were vehicles like Dodge Durangos, Chevrolet Trailblazers – vehicles that I had $12,000 invested in and they were worth $8,000.
“I’d go home everyday and my wife would ask ‘How did it go today?’ I’d say, ‘Well honey, I only sold three cars and lost $12,000 today.’
“But you had to collect cash just to get the vehicles for the market.
“Currently, I’m doing about 50 percent in-house financing. I cut my staff from 26 people at three stores to 11 now.
“We don’t carry many imports. We just don’t do well with them.
“Trucks have really disappeared. It’s all about cars now.
“I think that people who write the (value guide) books are sitting at their desks and thinking that it doesn’t make sense that cars would go up in value. How can a depreciating item go up in value? They just react very slowly and it’s killing the dealers.
“My guess is that the book went down so hard last fall on vehicles, that it never regrouped. Cars are bringing more than book no matter what book you look at.
“But in 2005, 2006 and 2007, you could buy cars at $3,000 back of trade-in value. The book was too high back then.
“Now we’re paying the price the other way. It’ll all equal out at some point, but it’s not fun being in the middle of it.
“I obtain my vehicles from a large vehicle network, since I’ve been in business 25 years. I get more online than I used to. I also go to ADESA Lansing and I’ve got a buyer who buys cars for me. The beauty of only having one lot is that I can be more selective in my buying.
“The (effect of the downturn in new-car sales) is a lack of trade-ins. It’s a rougher car out there. Every car is like Humpty Dumpty. You have to put them together. Every car needs more work and every car out there is a repo.”
“Our average retail price is about $10,900. That’s down about $3,000, because I’m not doing those Wells Fargo deals and that’s the price point people want to be at.
“I recently sold a 2006 Pontiac Grand Prix with 70,000 miles and sold it for $10,900.”
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