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Auto bailout could help local dealers: Without funds, layoffs could occur, owner of John Howard says
(The Dominion Post in Morgantown (WV) Via Acquire Media NewsEdge) Dec. 12--The $14 billion rescue package being considered for American automakers could increase financing and save jobs for at least one dealership in the Morgantown area.
Randy Buzzo, owner of John Howard Motors on Mileground Road, said he's had no trouble selling vehicles made by Subaru, Suzuki and Nissan, but the legislation could increase financing opportunities for his struggling Chrysler-Dodge business.
"People are staying away from them," Buzzo said. "Sales have dropped."
Chrysler provides financing for local dealers that is typically passed on to the customer in the form of lowinterest financing. If the bailout bill passes, Buzzo said Chrysler will have additional money to provide financing for both him and his customers.
But if the bill fails -- as wire reports indicated it may Thursday -- and sales continue to drop, Buzzo said it could force many dealers to cut jobs, particularly for mechanics, parts specialists and service advisers.
Buzzo said carmakers have warned that a collapse of the auto industry could cause 3 million workers nationwide to lose their jobs. If Chrysler goes another 90 days without assistance and sales continue to drop, Buzzo said he may have to eliminate as many as four jobs at his dealership.
"If you're a car dealer and you lose a portion of your business, you have to start cutting...," Buzzo said. "If you multiply that by all the Chrysler-Dodge dealerships across the country, you can see what would happen.
"This [federal assistance] has to happen. They have to stop the bleeding. They have to stop the momentum."
Jared Hartsock, owner of Superior Ford Lincoln Mercury on Earl L. Core Road, said the bill will have little impact on his business or his customers, however. Though Ford Motor Co. would be eligible for federal aid under the $14 billion rescue plan, the automaker has said it has enough cash to survive without help.
"We're not going to see a dime of those dollars...," Hartsock said. "It has a very limited effect [locally] by going through, and I think it has an equally limited effect by not going through.
"Ford Motor Co. is in a solid position. They have cash. We're going strong."
Hartsock said sales are down, but that's not because of national issues with automakers. It's due to a decline in customer confidence, he said.
"People aren't out there buying," Hartsock said. "Everybody's cutting back a little bit."
Hartsock said his customers actually stand to benefit from the drop in sales, as vehicle prices are lower and rebates are bigger. "It's actually a fantastic time to buy," he said.
But John Cognac, owner of Premier Buick Pontiac GMC, said customer rebates could disappear if Chrysler, GM or Ford declared bankruptcy.
"The effects of a bankruptcy would be dire," Cognac said. "There would be some serious fallout from that, for everyone involved."
Bankruptcy could affect city tax revenue, Cognac said, as dealers pay taxes based on the number of cars they sell. Buzzo said the crisis could also impact private businesses that rely on advertising revenue from car dealers and shipping services that transport auto parts, as well as other companies.
"There are hundreds of industries that rely on these three manufacturers," Cognac said.
Cognac said business has been "soft," but his dealership is doing well. He's not sure what to expect if GM goes bankrupt, but the dealership would survive.
"I would just sell more used cars than I do new cars," Cognac said. "We're going to be impacted no matter what, but we're going to be able to continue to do business."
Cognac, Buzzo and Hartsock all agreed that $14 billion wouldn't be enough to solve the auto industry's problems.
"The root of the problem is that we are importing far more foreign vehicles than we are producing American vehicles," Hartsock said. "We're sending money to other countries instead of supporting our own workers. That's where it all starts."
Buzzo noted that the proposal is worth far less than the $700 billion bailout package passed earlier this year to bolster the banking industry, but it involves more oversight.
"They're making these guys [automakers] jump through hoops, and they didn't do anything with the banks," Buzzo said. "From the emails I'm getting, there's starting to be a little bitterness."
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Copyright (c) 2008, The Dominion Post, Morgantown, W.Va.
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