Some local car dealers cross fingers for Big Three bailout

As leaders from domestic automakers prepare to return to Washington this week to ask for government help, some local car dealership managers and owners are crossing their fingers for a miracle that will keep the car manufacturers afloat -- and help boost sales at their own lots.

"We've lost half of our business in the last four years, and we've lost more than half of our employees," said O.C. Welch, owner of the O.C. Welch Ford Lincoln Mercury dealership near Sun City Hilton Head. "It's a struggle. I wish our government would do something to help all these consumers."

So far, Congress has been deeply divided over the $25 billion bailout package for the American automobile industry. A vote on the aid was scrapped after Democratic leaders told the automakers to come back with more details on the plan. Some lawmakers, including Republican Sens. Jim DeMint and Lindsey Graham of South Carolina, have said bankruptcy -- not a bailout -- is the best option for failing car companies.

In testimony to the House Financial Services Committee two weeks ago, Annette Sykora, executive director of the National Automobile Dealers Association, said bankruptcies by automakers will hurt struggling local dealerships.

She argued that restructuring after declaring bankruptcy could affect contracts automakers have with the dealers who sell their cars. Typically, dealers buy cars from automakers, then resell the cars to customers. Dealers also pay manufacturers for everything from the company signs on their lots to parts for cars, Sykora said. A high percentage of the profit a dealer makes comes not from sales, but from finance agreements with banks and warranty, repair and maintenance services they offer customers.

If manufacturers produce fewer cars after reorganization, there would be less stock for dealers to put on their lots. Consumers also might lose confidence in dealers getting inventory from bankrupt companies. That could shut dealerships down, Sykora said, noting that 660 dealerships nationwide already have closed this year.

Charles Brown, used-car manager at Park Automotive Group in Beaufort, sees the bankruptcy option a little differently. "It would probably cause a little more chaos," he said. "A lot of (the contracts) would be in jeopardy. But it couldn't hurt us any worse than we are now. We're still doing what we can to survive."

Sales at Parks are down 60 percent compared to this time last year, Brown said. Job cuts have them down to three salesmen and two managers between the used- and new-car sales departments.

"We are beat up," Brown said. "I'm starving. My workers are starving. It's going to take God to talk to these guys up in Congress to put the money where it needs to be put."

Keith Hart, general sales manager at Butler Chrysler Dodge Jeep on Salem Road in Beaufort, is optimistic his dealership will be able to keep its doors open -- bailout, bankruptcy or neither. He has turned the news off and is only paying attention to building his own business, he said.

"The new-car sales have dwindled down, but not to the extent that it's going to kill us," Hart said. "The used-car business still remains pretty decent. We've got a good group of people that work here, and they're doing their jobs."

Auto component suppliers and dealers generally are supportive of proposals for a bridge loan of $25 billion to the Detroit automakers to help with immediate cash flow needs, plus another $25 billion already approved for retooling to make more fuel-efficient vehicles. But many are concerned Congress has a distorted view of the industry, which was exacerbated by the contentious exchanges at hearings two weeks ago between the CEOs and some members of Congress, who criticized the CEO salaries and use of private corporate planes to attend the hearings.

Managers from Hilton Head Automotive, Hilton Head Cadillac, Modern Classic Motors and Hilton Head Chrysler Jeep Dodge declined to comment for this story.

Island Packet staff writer Renee Dudley and The Associated Press contributed to this report.