Ramirez believes there is an advantage to have multi-dealerships.
"It's easier to stay in business," he said. "If one franchise slows down you have another one to pick up the slack and keep all afloat."
Another concern of his is the future of Chrysler. He did not like it when there was talk that Chrysler and GM might be merging, specifically due to his Chrysler-Jeep-Dodge store. He fears that if there were a merger of the two, his Chrysler dealership would be more likely to close than nearby GM dealerships. If Chrysler is, in fact, sold, he's hoping GM won't be the buyer.
Ramirez concluded that dealerships that started most recently will be the first ones to die.
"It all comes down to having experience with the banks," he said. "I can expand because the banks know me, and that's because we have had the Ford dealership since the 1940s. We have a reputation."
"And your staff has to be good," continued Ramirez. "Your finance manager and your sales manager need to be experienced enough to know what's going on. They need to understand the various loan programs. Two or three years ago you could get away with having an inadequate staff. You can't do that now."
Ramirez forecasts a turn around in about six months. "Probably around the summertime we'll see a change," he said. "But the fuel situation will continue to be a problem. Things could turn around and then the fuel prices could spike and become outrageous and no one will buy a car and then we are back to where we are now."
To combat this possibility Ramirez is looking into opening import dealerships so that he can sell more fuel-efficient cars.
David Ferraez, Green Brook Pontiac, Buick, GMC and Hummer, Greenbrook, New Jersey
Green Brook Pontiac, Buick, GMC, Hummer, Green Brook, New Jersey opened its doors in May 1999. It has 78 employees. According to David Ferraez, 35 had to be laid off in the past three months.
The best sales years for Green Brook were 2002 through 2005. Average sales during this period were 250 to 300 cars a month, according to David Ferraez. Now it is about 150 to 160 a month, he added. "We are off by about 25 percent for 2008 when compared to those years," said David Ferraez.
Leasing is an important part of business for Greenbrook Pontiac, Buck, GMC, Hummer, said Ferraez. In fact, it accounts for about 60 percent of its sales. GMAC, the financial division of GM, stopped its leasing program and that has had a major impact on the dealership.
"That's why volume is off as much as it is," said Ferraez. "We had more than 2,000 customers in our lease portfolio. They are now coming off their leases at a rate of close to 100 a month. We can't offer them another lease, so 90 percent of those customers are leaving and going to other franchises."
Ferraez said that he has tried to hold that customer base with incentives and GM is helping out. According to Ferraez, GM is willing to give up about $1,000 to $2,000 on a deal that would get a leasee to buy or lease from a third party. But Ferraez complained that there is only one third-party company in the country willing to lease -- U.S. Bank. "GMAC and GM are putting in incentives to try and help us save this base, but it is not working," said Ferraez.
Ferraez added that he is only using banks for loans since GMAC has stopped buying paper about four months ago.
"The only thing we could do is use alternative banks, prime and subprime banks. We are using all the major players -- Chase, U.S. Bank, etc. Unfortunately for GMAC they didn't have money to lend. And now that they've gotten a loan from the Federal Reserve, they now have money to lend but they aren't as competitive as some of the banks are."
The dealership is located in a major urban area in Northern New Jersey and the market is saturated with dealerships.
"For every one dealer they need, there are probably three of us here they don't need. North New Jersey could be the most over-dealered part of the country. The truth is the domestic automakers do need to thin out their dealer networks by two-thirds."
In order to protect himself, Ferraez has added a foreign car manufacturer, Suzuki, and plans to expand with other automakers in the future.
"But we need to do it in a way that makes sense," he said. "We need to expand on property we already have because they already have all the elements of a dealership -- sales, service, body shop, parts and accounting."
And as a General Motors dealer, Ferraez is concerned about the automaker selling some of its brands. Recognizing that GM will probably dump Hummer, Ferraez has already made a buyout deal with GM concerning Hummer. "I made my settlement with GM. I will be a Hummer dealer for two more years," he said.
Other GM brands that could be sold or killed include Saturn, Saab, and Pontiac. Ferraez said that as a GM dealer he has to deal with it when it happens. As far as Pontiac is concerned, Ferraez has heard that General Motors will make it a small part of the Buick-GMC franchise. "It could be Buick-GMC with a couple of Pontiacs in the mix. But that's GM's decision. This is only what I've been hearing," he said.
The current crisis has caused him to spend less on marketing. "We are constantly advertising, but we are also prospecting for referrals and repeat business," he said. He has also targeted his advertising with direct mail by zip code and with Internet marketing. He also pays extra to search engines so that when someone is on the Internet looking for a GM dealer, it is his dealership that is listed first or close to first. This has proved relatively successful because a lot of people are interested in the Buick LaCrosse.
He has upgraded his Web site with the help of a company called Cobalt Group, which also works with GM. "They do a very good job helping us with the Web site and marketing on the Internet," he said.
Ferraez forecasts that the market "bottomed out" in October 2008. "January is tracking better than December and December tracked better than November," he concluded.
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