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TMCNet: South Florida car dealers like bailout deal but say more needed: South Florida auto sellers like bill but say more is needed to jump-start sales

[December 11, 2008]

South Florida car dealers like bailout deal but say more needed: South Florida auto sellers like bill but say more is needed to jump-start sales

(Sun Sentinel, Fort Lauderdale, FL Via Acquire Media NewsEdge) Dec. 11--South Florida automobile sellers agree that plans for $14 billion in emergency aid represent a good first step to help the troubled U.S. auto industry, but that more money and time will be needed to jump-start car buying.

The legislation passed by the House on Wednesday would create a presidentially appointed "car czar" to dole out loans, with the power to force carmakers into bankruptcy next spring if they don't cut quick deals with labor unions, creditors and others to restructure and become viable.

Mike Jackson, chief executive of Fort Lauderdale Is your Fort Lauderdale restaurant clean? -- Click Here.-based AutoNation, the country's biggest car retailer, backed the package he'd been seeking on Capitol Hill as a "bridge" until Congress approves more money next year.

But while the loans may help General Motors and Chrysler through their cash-flow crisis, it won't halt job losses. As U.S. automakers streamline, they will shrink brands and stores. Jackson predicts at least 900 dealers will go out of business this year and at least 1,000 more next year, leaving thousands of people unemployed and millions of dollars in investments lost.

"Darwin has arrived, and there's going to be a shakeout," Jackson said, calling the adjustment a needed "rationalization" of "too many domestic dealers."

AutoNation, with roughly 250 outlets nationwide, expects to close only a "handful," he said, because it shifted in the past six years from offering 70 percent domestic brands to offering 70 percent foreign brands.

The immediate problem, however, is the need for funding to help automakers weather the credit crunch.

Jim Arrigo, of Arrigo Dodge Chrysler Jeep in Tamarac and West Palm Beach, said the financing arms of Chrysler, GM and Ford also need help, so that buyers can get loans.

"They can spend money to fix up the car companies, but if no one can buy a vehicle, it won't make ... sense," Arrigo said.

Some drivers questioned why U.S. carmakers should get so much taxpayer money when Detroit automakers and unions have dragged their feet on producing cars that can compete with foreign rivals, and the government has so many other pressing problems.

"Why not force them to become "green jobs" companies or let the jobs go to efficient companies?" asked Brett Burkey, 47, an economics teacher at Spanish River High School west of Boca Raton Click here for restaurant inspection reports. "I think Congress is being way too soft in not demanding more."

The package agreed to by the White House and congressional Democrats is smaller than the $25 billion carmakers initially sought, and has more conditions.

AutoNation's Jackson called the stricter terms "entirely appropriate and entirely necessary." He said lawmakers had learned a lesson from their recent $700 billion bailout for the financial services industry.

"There were not enough conditions, so it didn't work," he said.

Ali Ahmed, sales manager at Rob Lambdin's University Dodge in Davie, said the bailout package can keep the companies out of bankruptcy.

"People won't want to buy cars from a bankrupt company," Ahmed said. "It's a warranty concern."

In November, sales of new vehicles across the United States plunged 37 percent to their lowest annual rate in 26 years. Sales fell 32 percent in October and 27 percent in September, , according to Autodata Corp., of Woodcliff, N.J., reflecting the deepening hurdles to access credit.

Sales fell 15 percent in August, before the credit crunch hit, data show.

That's why many South Floridians, including "green" energy advocate Barry Heimlich, think U.S. automakers should get help -- but with stiff conditions.

"This is a great opportunity for the U.S. auto industry to transform itself," said Heimlich, 67, of Hollywood-based Florida Energy Imperative. "Bankruptcy would be so disruptive. It's better to redirect this industry in an orderly way toward more fuel-efficient vehicles."

Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009. Arlene Satchell can be reached at asatchell@sun-sentinel.com or 954-356-4209.

To see more of the Sun Sentinel or to subscribe to the newspaper, go to http://www.sun-sentinel.com/.

Copyright (c) 2008, Sun Sentinel, Fort Lauderdale, Fla.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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