The good news, it would seem, is that GM notified here that she is going to still have a business. Of course then, as corporations do, they found a way to do away with her and other small dealers by pulling their financing. And where might you ask is the billions we taxpayers are passing along to GMAC and their lot? Read this letter first and see what is really going on the media isnt bothering to report.
Here is the letter from a local bank president trying to help this small GM dealership. It is to one of our two Senators here in Montana, John Tester.
Senator Tester,
We continue to hear about the massive aid being given to GMAC, including debt guarantees, in a continuing attempt to support the auto industry, but somehow that support is not being felt at the dealership level.
GMAC has taken a very firm line with its dealers, especially the smaller dealers in rural areas, and is pulling their flooring lines and not purchasing contracts on auto purchases that would have been acceptable credits in the past. I can understand that GMAC needs to revise their business operations, but with the assistance they are being provided and the actions of Ally Bank to acquire deposits at double market rate (apparently without the regulatory oversight we are subjected to), it would seem they should be able to continue to support those dealers that have made the initial cut from GM.
I have visited with several folks who have been impacted, and it appears GMAC’s pull back is fairly broad, but to our case in point –
Mission Valley Auto has been in operation for many years, and the present owner – Robin Vert-Rubel, Roland Rubel, and Phil Jarvis – purchased the dealership about 11 years ago from Robin’s father. This is a small, rural dealership, but it has consistently made money, supported the owner’s families, provided employment and serviced the folks of the Flathead Indian Reservation.
Two years ago, reconstruction that section of Highway 93 that accesses the dealership was begun, and for the next 12 to 18 months, access to the dealership was extremely difficult. About the time the road work was completed, the current economic crunch began causing a one – two punch that impacted their revenues. Consequently, they suffered losses in 2007 and 2008, but with the bit of a rebound in consumer confidence, they have been seeing more activity and for the month of May, they were back to nearly breakeven.
Last week they received their “letter” from GM telling them they have been selected to remain a GM dealer, and thanking them for being such an important part of the GM “family”. The following day, they received a letter from GMAC telling them because of their satisfactory trends GMAC was suspending their new vehicle credit line and increasing their interest rate, and gave them until August 30th to place a $150,000 cash collateral with GMAC and to inject an additional $270,000 in unencumbered capital. Obviously a small dealership such as this will not be able to meet these demands.
It appears that GMAC is not willing to look at a decade or more of very satisfactory history and is only concentrating on the past two years of losses, no matter that the loss of revenue was well outside the dealership’s control. It would appear that GMAC is very happy to seek assistance when they were in trouble – arguably at their own lack of business control with their expansion into sub-prime lending – but they are not willing to pass on some of their assistance to small rural dealerships that have been successful, but have had a temporary blow dealt by road construction and the economy.
Unfortunately, with GMAC pulling out of the flooring market, most small dealerships do not have access to any flooring. Most community banks in Montana do not have legal lending limits to carry flooring lines in the $2 million range, and those banks to do have the ability are no longer providing flooring lines. The SBA is trying to launch a flooring line loan program, but development of that loan program is taking some time and will not be available until sometime into July or August I have been told.
Hopefully we will be able to look at an SBA flooring line, but timing will be a problem and the total amount that may be available under the program may be a limiting factor.
The whole approach seems a bit at odds – the intent is to help support GM and other auto manufactures by providing massive support to GMAC (who cause a great deal of their own problems), but there is no support for the small, rural dealerships that would be purchasing the cars from GM and providing the support needed.
It appears this is just another case of the “to big to fail” that community bankers have been struggling with for years. Perhaps you have some thoughts on this dilemma?
Martin M. Olsson
President,
Eagle Bank
80 Heritage Lane
Polson, MT 59860
406-883-2940
Now I want you to think about what they are doing. GM is playing games. They want rid of small dealers, God only knows why as they fill a market void, but then their is no financing for the floor plans. They are being pulled. Does this seem right? Of course not ... and the bozo's on this Task Force are running what is left of a once great industry for America straight into the ground. The current administration is literally putting thousands of businesses out of business. Incredible!
Write your politicians today ... it is the least we can do.
1 comment:
Isn't it interesting that the "clunker" program put more people on the roles of those who will have to be bailed out when they cannot pay for their new cars...What a joke that program is....
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