Bruce Thomas washed cars at his father’s General Motors dealership here at age 12, changed oil in high school and sold his first Pontiac during college.
His commitment to a famed American industry, part business and part romance, never waned. He took over his family’s two dealerships, building a small fortune. In turn, he showered generosity on local churches, school athletic teams, charity golf tournaments and a group that helps women find jobs after prison.
But suddenly, all of Thomas’s success appears to be melting away.
Days go by without a sale. His debts are mounting. His friends offer him cash to get by. ‘‘I’m trying to survive as a car dealer,’’ said Thomas, now 59, ‘‘and I don’t know if I can.’’ The chief executives of the Big Three automakers are preparing to return to Washington this week with business plans that they hope will lead to a U.S. government bailout. But any such help will probably come too late for thousands of car dealers like Thomas, who sell American brands.
They have been struggling for years as Detroit’s fortunes have waned, but what remains of their sales is evaporating along with consumers’ confidence and credit.
The National Automobile Dealers Association predicts that about 900 of the 20,770 U.S. dealers in new cars will go out of business this year, and automobile analysts say the number of failed dealerships could rise into the thousands next year.
Even if Ford, Chrysler and GM survive, many believe a comeuppance is inevitable among dealerships: For years the United States has had more dealers for domestic brands than the sales volume of the Detroit automakers warranted.
The economic toll of a mass failure of dealerships around the country has already begun to harm the broader economy. In October alone, 20,000 employees of American auto dealerships lost their jobs, with more than half of those newly unemployed in retail trades, according to the Labor Department.
The auto dealers association estimates that new-car dealers produce a $54 billion annual payroll for 1.1 million workers and account for nearly 20 percent of the retail sales and sales taxes in American cities and towns.
Most of the dealerships are deeply rooted in their communities, and each is a slice of Americana—their big flags flying, their radio advertisements compelling attention and their youth baseball sponsorships and other charities helping to improve people’s lives.
In this small town outside Tallahassee, Thomas had 50 employees only two years ago when his two dealerships sold an average of 24 new vehicles a month. But now Thomas is lucky if he sells three new vehicles a week, and he has had to dismiss 10 of his remaining 40 employees in recent days.
Salesmen at Thomas’s Chrysler- Dodge-Jeep and General Motors dealerships are so idle that they spend their time doing Sudoku puzzles, reading sports magazines, and calling and writing old clients. They repeatedly implore the mail carrier to buy a car on mornings when he is the only one to come through the door.
Calmly resolute, Thomas spends his days talking to lawyers and bankers, trying to keep his business alive.
Thomas has lost a lot of money in an investment in a cousin’s Georgia dealership, but many of his problems appear to be not of his making.
In the past couple of years, rising gasoline prices have taken the steam out of the market for his Dodge Ram 2500 heavy pickup trucks and GMC Yukon sport utilities. In recent months, gasoline prices came down, but unemployment began rising here. The weak economy has hurt farmers, government workers and others. Quincy’s middle class is hurting because of plummeting values for homes and stocks.
And now the credit market — the lifeblood of any car dealership — is frozen. Finance companies have tightened credit both for car buyers and for dealerships like Thomas’s, which stock their showrooms with vehicles bought on credit. The car companies are delaying some payments to dealers because of their own problems.
Thomas has gotten behind in payments to GMAC, GM’s financing arm, so the company sent a representative to his dealerships two weeks ago to take control of the keys to new cars on his lots to guarantee that GMAC was paid when any vehicles were sold.
Thomas has stopped ordering new vehicles, and he is relentlessly cutting costs, including his own salary. He is reducing medical benefits and matching funds for the retirement accounts of his remaining employees. He has stopped giving free oil changes and tires to charities, stopped offering coffee to customers and even canceled janitorial services for the bathrooms.
Gathering his workers in the service garage the other day for a pep talk, Thomas said, ‘‘We are going to fight hard to keep everything going we can, but there are things that could go out of control.’’ As the employees fidgeted, he added, ‘‘Let’s try our best to sell a car today.’’ Salesmen are passing out their résumés to visitors, and they say they are not sure they will get paid from one week to the next.
‘‘You have to laugh to keep from crying these days,’’ Lynn Mayo, the office manager at the dealership, said as she wiped away tears. ‘‘The whole mess is hard.’’ The downturn has been years in the making. Thomas’s total sales, including repairs and used cars, fell to $26 million in 2007 from $32 million in 2005. This year he hopes sales will reach $20 million, based largely on stronger business during the first half.
During the past two months, sales and repairs hit a wall.
It is a big comedown for a business that began with Thomas’s father, Howard, who arrived in Quincy after World War II and started a used-car business across the street from a Chevrolet dealer. Howard Thomas was so successful that the Chevrolet dealer bought him out and brought him into the new-car business as a manager.
In 1967, Howard Thomas bought half of the local Pontiac-GMC dealership, and 12 years later it became a Thomas family operation, run by him and his son. The business expanded to two dealerships and became a major benefactor to the local youth baseball team, theater and other charities. More than 400 people attended Howard Thomas’s funeral in February. The business has long been the biggest retail employer in the town after Wal-Mart, and has produced $1 million in sales taxes annually in recent years.
Local officials say they know Thomas is in trouble, and they fear the consequences of his going out of business.
‘‘It would be a huge tragedy for us,’’ said Mayor Andy Gay, whose first job after getting married was selling cars at a Thomas dealership.
Thomas’s business is a microcosm of the whole industry. At least 70 percent of the dealerships that have closed so far this year sell American cars, and more than 60 percent of the remaining dealerships sell the troubled Detroit brands.
‘‘A lot of them will go out of business,’’ predicted Rex Henderson, an auto analyst at Raymond James & Associates.
‘‘We have never seen anything like this,’’ said Denny Fitzpatrick, owner of a Chevrolet-Hummer dealership outside Oakland, California, and chairman of the California New Car Dealers Association.
Having already dismissed 56 of his 114 employees, Fitzpatrick added, ‘‘You lay awake at night trying to figure out how to keep these doors open.’’ Car dealers are not entirely blameless for their fate. Auto analysts say they did not push Detroit hard enough to build better-quality, more efficient cars.
They note that the dealers lobbied hard in state capitals for laws to protect their franchises from the Detroit manufacturers, who wanted to limit their numbers and determine their locations.
Thomas lays some blame on the unions that drove hard bargains with the automakers, some on the news media that ‘‘glorified’’ imported cars and some on the Big Three for being ‘‘slow to react to the market and what the public wanted,’’ especially when gas prices rose.
To compensate, Thomas said, he had changed his inventory in the past couple of years to fewer trucks and sport utility vehicles, adding more fuel-efficient vehicles like the Pontiac G6. He shifted his advertising away from newspapers to the Internet. He gradually reduced his business’s charitable giving, once $30,000 a year, to $1,900 this year.
He has begun a radio campaign offering zero percent financing on all his 2008 Chrysler, Dodge and Jeep vehicles for 36 months, and savings of as much as $12,000 on Yukon XL sport utilities. But sales have not budged.
Still, Thomas said he had no major regrets. ‘‘As a kid I dreamed about cars,’’ he said. ‘‘The business has changed and the cars have changed, and it’s been fun to be part of that.’’ He said he saw more trouble ahead.
‘‘I only see it getting worse. Any bailout to Detroit will take a while to get to Main Street.’’