Things have begun to return to normal at some Chattanooga-area auto dealerships that earlier were involved in a restructuring process brought about by General Motors’ bankruptcy in 2009.
Herb Adcox Automotive, formerly Herb Adcox Chevrolet, was the last of the area dealerships to reach a settlement with GM, in a deal that took months to negotiate.
“So far the transition has been fine,” Adcox said, though the shift to selling only used cars is still ongoing at his Lee Highway location.
“We’ve had a lot of people come by and wish us well and say they’re going to continue to do business with us, and of course we had a lot of people who were disappointed, too,” Adcox said.
He’s optimistic about moving into a growing used-car market, even though he said he still has a bad taste in his mouth from his last days with GM.
“We’ve had to remove the signs. It gives you a sad feeling and a little ill will,” Adcox said, but he believes his business will begin to grow because people are more interested in used cars now because of their lower price.
“The used car business hasn’t dropped like the new car business has,” Adcox said. “Unemployment has hurt car sales, but it hasn’t hurt used car sales nearly as bad.”
Tim Kelly, who at one time sold GMC and Cadillac brands for GM, also settled with the automaker and reorganized his operations in April to sell only foreign vehicles.
“Our divorce is final. We’re done; we’ve moved on,” Kelly said.
He’s still “hanging in there,” but the oppressive July heat may have kept some customers away, he said. It’s “hard to get excited” about new car sales in a down economy, Kelly said, but he has seen a slight rebound in sales as temperatures have dropped, and he hopes sales continue to pick up moving forward.
In the meantime, Kelly opened a NAPA service center in downtown Chattanooga on Sept. 1 to capture part of the downtown service business.
Kelly sells Infiniti, Subaru, Mitsubishi and Saab vehicles at his two locations on Chapman Road and Riverfront Parkway. The franchises for his GMC and Cadillac brands were transferred to Brent Morgan, formerly the area’s Saturn dealer, who sells his newly added brands out of the rebranded Integrity Automotive on International Drive.
Morgan said that since the transfer, business is tracking ahead of projections, and he has acquired extra vehicles to compensate for brisk sales.
“We’re carrying about 250 new vehicles in stock. We would normally be in the 150 range,” Morgan said. “The lot got very crowded, so we’ve got employees parking off site.”
The dealership has launched a local brand ad campaign in a partnership with GM, and Morgan said he already is looking at expansion plans.
“We were originally at 15 people, and we’ve gone north of that already. We’ll probably get up to 25 new employees, so we are adding jobs,” Morgan said, noting that he’s also looking at expanding showroom space. “It’s an exciting time. We’re trying to make the best of it.”
The idea to shut down roughly 2,000 GM dealerships nationwide by October 2010, including three in the Chattanooga area, originated with the U.S. Treasury’s “auto team,” according to an audit by the Office of the Special Inspector General for the Troubled Asset Relief Program. While the original idea was to save money and improve GM’s fading fortunes, the report went on to state that in hindsight, the closures didn’t actually save the automaker any money in the end.
GM released a response to the report noting that though there had been failures at the “old” GM, it had reinstated several hundred dealerships and the company was “moving forward to improve dealer relations.”
Don Ledford Automotive of Cleveland, Tenn., was the only area dealership to have its franchise reinstated following a groundswell of public support that included city and county officials, as well as hundreds of attendees at a rally.
The dealership, run by Debbie Ledford Melton, has seen sales rise 20 percent on its Buick, GMC and Cadillac lines following the company’s near loss of its GM franchises, Melton said.
“I think people are conscientious now about purchasing in Cleveland and supporting our local businesses, and I think its made people not take things for granted,” she said.
Contact Ellis Smith at esmith@timesfreepress.com or (423) 757-6315. Follow him on Twitter at twitter.com/ellisthered