Modesto and Escalon car dealerships going out of business

Generation Motors shuts down; Friendly Chevrolet to follow

gstapley@modbee.com, tmoran@modbee.comOctober 3, 2008 

Generation Motors in Modesto shut its doors Friday morning, an apparent victim of the sluggish economy that has toppled auto dealerships nationwide.

All new and used Isuzu, Kia and Lincoln-Mercury vehicles at the dealership on McHenry Avenue’s auto row were removed by noon. Owner Curt Hughes said through an associate that he also would close Friendly Chevrolet in Escalon.

Hughes, representing the third of four generations in the auto business, bought Manteca Dodge in 1979, Friendly Chevrolet in 1994 and opened Generation Motors four years ago where Showcase Auto Plaza used to stand. His son-in-law, Stefan Leer, bought the Manteca dealership but it reverted back to Hughes in March.

The Manteca dealership recently closed as well, said Debby Moorhead, executive director of the Manteca Chamber of Commerce. Other area car dealers said sales have been sluggish since summer.

“It’s been a difficult market this year, and the valley has been hit the hardest,” said John Gardner, owner of Central Valley Automotive in Modesto. “With the local real estate market, the gas spike and bank failures, it has been the perfect storm.”

Gardner said he wasn’t sure what led to the closing of Generation Motors, but said the economy has hit some dealers harder than others. “It’s sad to see a fellow dealer in town unable to survive this mess,” he said.

Jim Halvorson, co-owner and vice president of American Chevrolet in Modesto, said the problems go far beyond the auto industry.

“All I can tell you is the money is not flowing, but that’s true of all businesses,” he said. “These are tough economic times.”

Credit has been a challenge with the national financial crisis, said Jeff Steves, an owner of Steves Chevrolet in Oakdale and Chowchilla.

“The values of vehicles are plummeting, and people come in upside down on their trade-ins. The banks don’t want to loan much over invoice,” he said.

The real estate collapse means that customers can no longer take equity from their homes to buy cars, Steves said. Gas prices are less of a factor, Steves said.

“People still need their Tahoes and Suburbans,” he said.

Gardner said once people got over the initial gas price panic, the sales rebounded. Central Valley sold 30 Dodge trucks last month, he said. “People will buy if the price is right.”

The problems aren’t unique to the Northern San Joaquin Valley.

“We are seeing on a weekly basis dealerships closing throughout the state,” said Peter Welch, president of the California New Car Dealers Association. About 100 dealer members of the association have not renewed their membership this year.

The association has confirmed that 70 of those are no longer in business. At the end of 2007, the association had about 1,300 members. Now it has about 1,200, Welch said.

Even the Bay Area with its higher income levels, has been hit with dealership failures.

Among the casualties in the Bay Area during the past year: A Ford dealership in Dublin, a Volvo dealership in Pleasanton, a Ford dealership in Oakland and a Dodge dealership in Brentwood. In addition, a Hyundai dealership in Pittsburg consolidated its operations with a GMC dealership. In Hayward, a Ford dealership closed its doors and moved to San Leandro. A Chevrolet dealership closed in Los Gatos ON Wednesday. And a GMC dealership said this week it would close in Colma.

The picture is grim nationally as well. Toyota Motor Corp., Chrysler, Ford Motor Co. and Nissan Motor Co. reported U.S. sales declines of more than 30 percent for the month compared with September 2007, while Honda Motor Co. and General Motors Corp. showed sharp downturns as well.

The industry sold 964,873 vehicles, a 26.6 percent slide from a year earlier and its biggest percentage drop in 17years, Autodata Corp. reported Wednesday.

In Georgia, the nation’s largest Chevrolet dealer closed 10 days ago. Bill Heard Enterprises, which operated 13 stores with 2,700 employees from Nevada to Florida, announced the closure Sept. 24. The company had $2.1 billion in sales in 2007, and sold more than 40,000 vehicles. A news release blamed the business climate.

Rumors have swirled about other Modesto-area dealerships in trouble.

“California statewide, and nationwide there is a shift, and there will be less dealers … , ” Gardner said. “The manufacturers have had to bring down their business plans, and we will see some dealers that won’t survive.”

Gardner said his dealership is strong, because of a diversified product mix, and Steves and Halvorson also said they will survive the downturn. Steves said he has heard from some of the Generation Motors employees looking for jobs.

Kirsten Alvord, business services supervisor at the Stanislaus Economic Development and Workforce Alliance, said Friday she was unaware of the closings.

“We will have our rapid response people out there today,” she said. “We try to get the word out to employers that we are here to help, to get their employees help.”

While Hughes wouldn’t talk about why he closed Generation Motors, the Modesto Planning Commission is expected Monday to take up his request to divide the car lot property into two parcels.

Bee news services contributed to this report.

Bee staff writer Garth Stapley can be reached at gstapley@modbee.com, or 578-2390. Bee staff writer Tim Moran can be reached at tmoran@modbee.com or 578-2349.

Modesto Bee is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service