The recent closings of so many General Motors dealerships in the Hartford area have brought more customers to the survivors; in fact, several dealers say business is up for the first three months of this year despite the severe recession and concerns about the Detroit icon’s prospects.
Most of the remaining dealers are Chevrolet dealerships. Although new car sales typically are down compared with the same period a year ago, the decline is considerably less than the 49 percent reported nationally by General Motors, the dealers said. Moreover, the dealers’ used car sales are robust and the service and parts business is booming, they said.
“We’ve been having a great start to the new year,” said Michael James, general sales manager at Davidson Chevrolet in Canton, where new car sales are down about 15 percent, but used car sales are up at least that much. “The parts and service departments are well ahead of last year because of dealers that have been closing around us.”
At least four Chevrolet dealerships and three others selling other GM vehicles have shuttered in the area in the past year. Only a handful of Chevrolet dealers remain.
In effect, the nation’s severe recession is accomplishing the painful, yet necessary task of shrinking the excessive number of Big Three dealerships, said George Magliano, an analyst with HIS Global Insight, an international economic and financial information company. And the dealerships that survive are the beneficiaries.
“That’s the whole intent of this drive by the manufacturers to squeeze out dealerships,” Magliano said of GM, Ford and Chrysler, citing their plans to close about 1,200 dealerships this year, after 900 closed last year. “The problem is that you can’t just close them because you have franchise laws” protecting dealers. “So what’s happening is that this recession is closing dealerships for [the manufacturers].”
At Gengras Chevrolet in East Hartford, new car sales have actually climbed about 25 percent compared with the same period last year, according to owner E. Clayton “Chip” Gengras. “Our Chevrolet business has grown tremendously due to the closing of many Chevrolet and other General Motors brands around us,” Gengras said. A focus on improved communication with employees and customers and an intensified commitment to the Internet are other reasons why the dealership has outpaced its competition, he said.
The same strategy has helped his Chrysler dealership in East Hartford, the only local Chrysler new car outlet, where new car sales are up about 15 percent, Gengras said. No area Chrysler dealerships have closed in the past year.
Hit harder was Carter Chevrolet in Manchester, where new car sales are off about 34 percent for the first three months, said Paul Koldras, sales manager. Still, it would have been worse had other dealers not closed. “The impact is that essentially we’re able to go and increase our share of the pie — the pie will basically be divided into bigger pieces now,” Koldras said.
Of course, the environment for General Motors and Chrysler continues to be challenging, dealers emphasized. The likelihood of bankruptcy reorganizations grew at the end of March after President Obama rejected the two manufacturers’ recovery plans as inadequate. GM was given two more months to develop a better strategy, and Chrysler was given one month to complete a partnership with Italy’s Fiat automaker. The government pledged to back car warranties for GM and Chrysler.
Obama’s announcement shows a final decision on how the two companies will be restructured is coming soon, and that’s a healthy development, Gengras said. Whether GM and Chrysler reorganize inside or outside of bankruptcy, he predicted the result would be similar, with the key nameplates intact.
“Chevrolet’s not going anywhere. Chrysler/Jeep might look a little different,” Gengras said. “We might not have as many offerings, but the brand names that customers want will still be here.”
Other Chevrolet dealers, too, expressed confidence that whatever happens with the government’s aid package, the Chevrolet brand would survive.
“I think that Chevrolet is probably the strongest brand that General Motors has,” said Koldras, the Carter Chevrolet sales manager. It is a key argument he and other Chevrolet dealers employ when facing customers worried that GM might go out of business.
Whether all the remaining local Chevrolet dealers will survive a bankruptcy reorganization is an open question, however.
“All our franchise agreements will be broken at that point, said Sean Sullivan, owner of O’Neill’s Chevrolet & Buick in Avon and a GM/Chrysler dealership in Torrington. “They could then terminate dealerships. I have two Chevrolet stores, so I’m nervous. I might just have one. I’d like to keep both.” Sullivan also questioned whether consumers would want to buy from a company in bankruptcy.
The four Chevrolet dealerships that closed in the area over the past year were to the west and north of Hartford — Parsons in Farmington, Crowley in West Hartford, Olender in Windsor, and Suburban in Southwick, Mass. Also closing were General Motors dealers Tony March Pontiac Buick GMC in Hartford, March’s Saturn in Berlin and Thomas Cadillac in Hartford.
In all, about 50 dealerships closed in Connecticut over the period, leaving about 270 new car dealerships in the state, according to James Fleming, president of the Connecticut Automotive Retailers Association.
For surviving area GM dealers, one constant has been the healthy used car market. At O’Neill’s Chevrolet & Buick in Avon, used car sales have doubled in the first three months, compared with the same period last year, owner Sullivan said.
In addition, several dealers cited increases of about 20 percent in their service business, which is central to the franchises, said Magliano, the HIS Global Insights auto analyst.
“The problem is that most dealerships do not sell a lot of new cars,” he said. “They tend to make more money off service then they do off new car sales. … If you think about that, that works out really neat. More people are out there owning cars than buying cars.”
Area GM and Chrysler dealers are not the only ones reporting improved business over last year. Other dealerships in the state are also reporting upticks in sales recently, Fleming said. Among the reasons, he said, was the new federal income tax deduction on new car purchases, the decision by the federal government earlier this year to loan billions to GM and Chrysler, and an improvement in consumer confidence. And there is something else, he said.
“The other thing is the deals you can get, not just on General Motors [vehicles] but on others are very, very good,” he said. “My guys are telling me that consumers are buying cars now.”
