LANSING – The president of the Michigan Automobile Dealers Association said Friday he can’t predict how long dealerships can survive with Congress in limbo over giving the Big Three automakers bridge loans totaling $34 billion. But Ralph Shaheen, who owns several dealerships in the mid-Michigan area, said the current state of affairs isn’t the worst he’s seen.
While the domestic automakers are in dire straights, Shaheen contended Michigan dealership owners have survived through tougher economic times since the 1970s that had nothing to do with the status of the Big Three.
“Every dealer is an entrepreneur; every dealer knows how to survive. I think we’ll come back again. I don’t have the crystal ball that says (when).” he said.
Making his remarks on Michigan Public Television’s “Off the Record,” Shaheen said his own dealerships lost about 10 percent of their sales in October and November was worse at 20 percent. People who need a vehicle are still buying, he said, but people who have some wiggle room between staying with their old car or buying new aren’t biting.
While it’s estimated that across the United States dealerships will have to close in order for the domestic car business to survive, Shaheen said most if not all of the dealership closings in Michigan in recent years have been through consolidation and he expects the same will be true in the national marketplace.
Shaheen in fact bought out a Buick, Pontiac, GMC dealership two years ago and combined it with his Team One facility.
But as part of adapting to the economic realities, Shaheen estimated about 30 percent of dealership employees have been laid off over the past few years and dealership owners like himself have been trying to bring in revenue in other ways like improving their facilities and adding accessories and services to vehicle purchases to entice buyers.
Losing one of the Big Three through bankruptcy would be “very catastrophic,” Shaheen said, because of the multiplier effect auto jobs have on the economy, but also because people don’t want to buy a car from a bankrupt automaker. Asked if some customers have expressed concern about that becoming a reality before buying, Shaheen said a few people raised that prospect this week.
As for people’s ability to buy a car given the current credit crisis, Shaheen said mid-Michigan buyers have not been affected as much because the area’s credit unions are still matching people up with loans even if the banks are less able to.
On Monday, officials from the auto dealers association will head to Washington, D.C. to lobby Congress for the auto bridge loans. Shaheen said the last message he got from officials at General Motors asked dealers to contact their congressional representatives, “stay the course and sell cars.”
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