"I've talked to friends of mine who have GM dealerships and they've told me that GM is taking longer to reimburse them. That could really hurt a dealership substantially," he said.
Varela said that he is not leasing at all because Ford Credit doesn't offer it. But he finds that it doesn't matter much in his region.
Among the cuts Varela's made is his advertising budget, by about 40 percent.
"I've changed how I market," he said. "I cut back a lot on sponsorships and I am alternating my advertising in television and newspapers -- one week TV and one week newspapers. I've become more selective."
He's seen many minority-owned dealerships are closing, which he believes is because most are first generation dealers.
"I've been in the business for 15 years and I am still a first-generation dealer," he said. "Many main dealerships are second-, third- or even fourth-generation. The minority-owned dealerships that are closing have not been in business long enough to build any wealth. So when it comes to putting money into their business in order to survive they don't have it. And banks won't loan them money because they don't have assets."
Varela optimistically forecasts that the industry turn-around will occur in the beginning of the summer.
"In 2008 the first two quarters of the year were the best and the last two quarters were the worst. I expect that to flip flop in '09."
Daniel Ramirez, Ramirez Ford Sales and Ramirez Chrysler-Jeep-Dodge, Rio Grande City, Texas
Daniel Ramirez and his family own a number of dealerships --Ramirez Ford Sales and Ramirez Chrysler-Jeep-Dodge in Rio Grande City, Texas and Rio Grande Valley Motors in McCallum, Texas. Rio Grande Valley Motors sells Jaguars and Land Rovers. The Ford dealership opened in the 1940s. The Dodge store opened in 2003 and the Jaguar/Land Rover store went into business in 2005. The Jaguar/Land Rover store has 100 employees and the stores in Rio Grande City have 100. Ramirez said that he has not laid anyone off per se, but he is not filling any jobs when a person leaves or retires.
His best period was around the time of Sept. 11, 2001.
"About a year or two before and about a year after," said Ramirez. "It was about the time of 9/11 that there were zero percent loans and sales were phenomenal."
He depended on the domestic automakers' financial divisions to provide the loans his customers needed.
"On the Ford side, during the good years, 90 out of 100 cars sold were through Ford Credit," he said. "Now it's 10 percent." Accordingly, he is relying on local banks.
"Anything that's out there. It's a constant struggle to find banks that are willing to buy paper."
Ramirez has gone through the rare experience of changing manufacturers. This is something that is becoming more common as the domestic automakers sell brands to other automakers. Ramirez opened his Jaguar/Land Rover dealership while those two brands were still owned by Ford. Tata Motors of India bought Jaguar and Land Rover last year. His dealership was actually involved in the acquisition.
"After the acquisition was announced, Ford sent me a termination letter then I immediately got a re-instatement letter from Tata," he said. "Every single Jag and Land Rover dealer was terminated, then brought back in under the new company."
However, Ramirez pointed out that was how Ford and Tata worked out their deal. When a brand is purchased by another company there are no guarantees. That's why he is on "pins and needles" concerning Jeep for his Chrysler-Jeep-Dodge dealership. He has also found that having a foreign-branded dealership has opened up his ability to expand. He is adding Audi and Porsche to the property that hosts his Jaguar/Land Rover dealership.
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