A Dealer's Deal: Springfield Lincoln-Mercury-Jeep divests new-car lines

Springfield Lincoln-Mercury-Jeep owner Steve Hathcock has sold his new-car franchises. Youngblood Motors acquired the Jeep label, while Republic Ford added the Lincoln and Mercury nameplates. Terms of the deals were not disclosed.

Hathcock, who has been in the car business since 1976 – currently at 1226 S. Glenstone Ave. – said the sale was in response to corporate efforts by Chrysler and Ford to consolidate their main nameplates into single dealerships.

“The factories basically told me who I should sell to,” Hathcock said, noting that both Youngblood Motors owner John Youngblood and Republic Ford owner Bob Beine were the corporations’ choices. “They’re good guys, and they’ll do a good job.”

Hathcock noted that his new car sales were evenly split between Lincoln, Mercury and Jeep.

Chrysler spokeswoman Curtrise Garner said the company is actively discussing consolidation with individual dealers, though they’re not being pressured to sell. Chrysler has dubbed the efforts “Project Genesis,” and company officials say the idea was formed after meeting with the company’s National Dealer Council.

“It’s about right-sizing the company, and it’s also about making our company more profitable,” Garner said. The company has noted that having multiple brands in centralized locations saves on vehicle shipping costs.

While the Springfield deal gives Youngblood two of the three major Chrysler brands – Chrysler, Jeep and Dodge – the third brand is still sold in Springfield by Central Dodge. Owner Harold Neeley said he hasn’t offered to, or been approached about, selling his franchise.

Corporate cost cutting

Auto manufacturers are looking for ways to cut costs wherever possible as a result of major financial losses in recent quarters.

Dearborn, Mich.-based Ford (NYSE: F) reported a net loss of $8.77 billion in the second quarter, based largely on a $6 billion decrease in sales revenue, though that number is somewhat skewed by the company’s sale earlier this year of Jaguar and Land Rover to India’s Tata Motors and the 2007 sale of Aston Martin to a group of British investors.

Chrysler LLC is majority owned by private equity firm Cerberus Capital Management LP and is not required to report its quarterly results.

However, Daimler AG (NYSE: DAI), which still owns nearly 20 percent of the Auburn Hills, Mich.-based auto manufacturer, indicated in its latest earnings report that Chrysler lost $510 million in the first quarter.

Both companies also are losing market share; Ford, third in U.S. market share behind top-seller General Motors and Toyota, pulled in 14.2 percent of U.S. new light vehicle sales in July, according to Autodata Corp., down from 14.4 percent in July 2007. Chrysler’s market share was fifth at 8.6 percent, down from 10.5 percent last year.

Ford has been working since 2005 on a consolidation program similar to Chrysler’s Project Genesis that also includes combining its major brands at the corporate level.

“We’ve been working with our dealers for more than two years,” Ford spokeswoman Marisa Bradley said. “We’ve been analyzing what’s the right number of stores per area and what makes sense for our dealers.”

She added that the process is strictly voluntary.

Dealer deals

Youngblood said he’s excited to be adding Jeep to his Chrysler line.

“Jeep is a good brand with a solid reputation,” Youngblood said. “We’re now the official Jeep dealer, and we’re looking forward to selling and servicing those vehicles.”

Republic Ford owner Beine said the addition allows him to provide the full complement of Ford vehicles and positions him for the future. He said the move also is an indicator of Springfield’s move toward a more big-city feel.

“It makes Springfield more of a metropolitan area now that (the consolidated Ford brands) are in the suburbs,” Beine said. “It’s a sign that Springfield is growing and gives the city more of a suburbia-type atmosphere.”

The new owners were eager to begin selling the new vehicles; both Youngblood and Republic had signage and vehicles on their lots the day the purchase closed.

Central Dodge owner Neeley said while he understands the advantage of consolidation for the automakers, he thinks there still needs to be options both for car dealers and customers, especially in outlying areas.

“For the dealers in small towns like Ava or Cassville, it’d be tough for them to have to drive to Joplin or Springfield or Fayetteville, Ark., to get service on their cars,” Neeley said. “They need to keep some of those rural dealers.”

As for Hathcock, he said his dealership will remain open until late August – doing business as Springfield Car Sales – to sell his remaining used vehicle inventory. He doesn’t have any definitive business plans beyond that point.

“I’m going to explore other business ventures, but I might retire for a while,” Hathcock said. “I don’t know what I’m going to do – maybe nothing.”

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