Billings Gazette (MT) via NewsEdge :

Mar. 29--It was once a safe-and-sound, small-town business, but Donna Todd is now nervous about passing on the family's 23-year-old dealership, Stetson Ford in Big Timber, to her two teenage sons.

Nationally, sales are off an average of 41 percent and are at a 28-year-low, according to Edmunds Inc., a company that tracks sales of new and used vehicles. Major auto manufacturers, domestic and foreign, have received or are asking for billions in government bailouts. Factories are padlocked. Manufacturing has been slashed. And tens of thousands of auto jobs have been lost.

In short, buyers are scarce and dealers are scared.

And this pain has motored into Montana. "Of course, our numbers are down over 30 percent, January 2009 over January 2008," Todd said. "Now it hurts me more than anything to think they may not, either because of the economy or me, be able to stay in the business until my sons are out of college."

The dealership's building in Big Timber has ceilings so low that some modern trucks don't fit. So, a year ago, Todd started building a new dealership along Interstate 90. Then the recession hit, she ran out of money, and the building sits empty.

"I may have to sell it to concentrate on our existing store. I've gotten lots of inquiries from people who want to be along the interstate," she said. "It's an extremely tough time for our auto industry, but we are staying in business. We're still selling new and used vehicles."

The closure of Ford dealerships in Harlowton and Livingston helped a little, sending more buyers to Stetson Ford, she said.

Six years ago, Todd was a stay-at-home mom until her husband, Stetson Todd, died in a Colorado snowmobile accident. In 1986 at age 25, he started Stetson Ford, the youngest person ever approved for a dealership by Ford Motor Co., she said.

Then last December, Ford unexpectedly pulled the dealership's "floor plan financing," the loans to buy inventory. So now when Todd sells a truck or car, she brings the vehicle in from other dealerships, which takes a day or two.

Like other dealers, these lean times have forced Todd to cut her staff of a dozen to four, including her.

"I'm not a quitter. I will persevere here." Todd said.

The $400 stimulus tax credits may help auto sales, she said. But most workers are receiving this credit through an extra $13 per week in their paychecks, which isn't that noticeable.

Big economic improvements, Todd said, are unlikely this year because people are unsure about their jobs, their retirement accounts and the local economy.

"That's a big decision for people," she said. "First is their mortgage and second their vehicle."

Montana auto dealers meeting recently in Helena told anecdotal stories about customers starting to come back to the showrooms, according to Tim Hubbard, owner/dealer of University Motors in Missoula and president of the Montana Automobile Dealers Association.

"It seems like the pent-up demand by customers is starting to come back," he said. "Things will get better. Nothing lasts forever."

Tonya House, another south-central Montana car dealer who has worked in the business since she was 16, said she sold 19 new and used vehicles last month at her Columbus dealership. That's two more than in February 2008.

"We have niche buyers, the locals and the farming communities," she said.

House owns three smaller dealerships with her husband, Wes House: Beartooth Ford in Hardin, Columbus and Red Lodge and she runs Beartooth Chevrolet in Big Timber with another partner, Ron Heller.

Like Todd, House said she worries about losing General Motors' financing for her inventory. GM has accepted a $13.4 billion federal bailout and is circling around a possible bankruptcy filing.

"When times get tough, you need to fall back on your local bankers," House said, so she is shifting more business to United Bank of Columbus.

Forced consolidation is another wild ride awaiting some dealerships.

Of the 20,700 new-car dealers, the National Automobile Dealers Association said 200 new dealers opened last year, but 900 closed, for a net loss of 700 U.S. dealerships. Another 1,200 dealers are expected to close this year, according to NADA.

The debate is where will that consolidation hit hardest. Will it be smaller towns like Big Timber, where buyers can drive to bigger cities like Billings, or will it hurt large cities?

"I think it will happen more in the bigger markets like Houston, Los Angeles and Denver, which used to have about 10 Ford dealerships when I worked in that town," House said.

<<Billings Gazette (MT) -- 04/02/09>>