From ;http://www.sj-r.com/business/x1176005389/Small-town-car-dealers-become-an-endangered-species July 2010 By CHRIS DETTRO THE STATE JOURNAL-REGISTER Posted Jun 07, 2009 @ 12:00 AM Every small-town Main Street used to have a bank, a car dealer and a grocery store. Now the bank may be reduced to an ATM, the grocery has bowed to a Wal-Mart somewhere, and the car dealer has either shut down or is in jeopardy. The recent bankruptcies of Chrysler LLC and General Motors have put 2,700 new-car dealers — many of them family-owned operations that have been fixtures in small towns since the 1940s and ‘50s — in a spot to lose their franchise. Chrysler LLC has identified 789 dealerships it plans to close next week, nearly a quarter of its dealership network. General Motors has already notified 1,100 dealerships it doesn’t plan to renew their franchise agreements in late 2010. GM wants to shed 900 more through attrition and by selling or discontinuing its Hummer, Pontiac, Saab and Saturn brands. “There’s no question, especially in the smaller communities, that it has a huge impact,” said Peter Sander, president of the Illinois Automobile Dealers Association. He said new-car dealers account for 20 percent of sales tax collected statewide, a figure that probably is higher in many communities. Rick Baier, mayor of Cissna Park, a town of about 815 in Iroquois County, said car sales at Rust Chevrolet generate between $40,000 and $50,000 in sales tax annually for the community. That’s about half the town’s yearly sales tax take. Rust Chevrolet was one of the 1,000 dealerships notified by GM that their franchise agreements wouldn’t be renewed in Oct. 2010. The dealership, which has been in business more than 100 years and has been selling new Chevrolets for 96 years, will continue to sell used cars and will make up some of the sales tax loss that way, Baier said. But with total revenues of around $250,000, the loss of the new-car dealership easily could mean a reduction in services or increases in other rates for residents, Baier said. “We’re hurt by this,” he said. “It’s one of those home-grown, family-owned businesses that used to be the heart of the country. “But we are a close-knit community, and we’ll band together and the town will go on,” he said. Brad Nikles started selling new Chevrolets in Mason City in 1988. He added the Buick line a year later. In 2000, he bought the Chrysler dealership and added those lines. Last month, he received notice that he wouldn’t be selling new Chrysler products anymore. Then last week, General Motors let him know he had survived its cuts. “They left me with what I started with,” he said. “General Motors was much more predominant anyway. No employees are being let go; things will stay the same. “I think we do a fair job of capturing the local market,” Nikles said. “It’s a free enterprise system, and I’m glad it is. It can be frustrating at times, but for the most part, people are for you. “We have a ton of repeat business, which means we’re doing the right thing,” he said. Nikles thinks small-town auto dealers will survive. “They’ll make it,” he said. “A well run small-town dealership has something the others don’t — personality and character,” he said. He said a dealership can be a place for people to hang out, drink coffee and catch up on the community’s news. He mentioned a customer who asks him to go to her house and get her cars ready before she comes back to town after being away for the winter. “That’s what small-town dealerships do,” he said. “As a group, they’re moral and giving and support baseball and other community stuff.” “The bell curve for us is a lot different than it is for the big dealers,” he said. “When things are booming, we don’t boom like the big guys do. But you have limited overhead and it’s easier to make ends meet if you run your business properly.” John Stiltz’s grandmother and grandfather bought cars in Petersburg from Tom Knous’ grandfather, Clyde. Knous Motors started as a Studebaker dealer in 1928 and sold new Chryslers, Dodges and Jeeps since 1994. Knous has been the only new-car dealership in town for years. But Knous decided before the Chrysler bankruptcy he was moving his Knous Motors Co. Inc. to used-car only sales. “When we lost our Ford and Chevy dealer about 10 years ago, we thought that would pretty much be it,” said Stiltz, mayor of the community of about 2,200. Jack Stoldt operated Ford and GM dealerships in Petersburg until the late 1990s. They later were operated by HPR Automotive Group, then as a Chevrolet-Pontiac-Buick dealership until closing in 2002. Then Nikles Motors, the Mason City new-car dealer, opened a used-car dealership on the same spot in 2005. “Nikles gave us a shot in the arm by moving his used-car dealership,” Stiltz said. “We’ve done very well in Petersburg, and its done very well for me,” Nikles said. “I’m thankful to have it.” Stiltz said the community’s tax revenues will suffer some because there won’t be new cars sold in Menard County. “But we don’t see a lot of concern here,” he said. “The used-car market is good and we have an extremely good lot of used cars — good quality and reasonable prices.” But Stiltz realizes used-car sales might not make up all the difference. “The tax on a new car that sells for $40,000 is a lot more than on a used car that sells for $3,500,” he said. “It takes several used cars to match that $40,000 sale.” He understands why new-car dealers in smaller communities are having a tough time of it. The economy is a large part of it, but the need for expensive diagnostic equipment squeezes profits, too. “In today’s world, with all the different models, it costs a lot to have all the computer systems to fit everything,” he said. He said Petersburg residents “do shop locally for cars, used cars in particular.” “And when we had three dealerships here, almost every new car came from Petersburg,” Stiltz said. Now, they will have to go out of town for new models. “I’m just happy we have two dealers here,” Stiltz said. “That’s better than having none.” Auburn found itself without a new-car dealership for the first time in more than 50 years when Heritage Chevrolet closed in September. A used-car operation, Kruse Enterprises of Girard, has since opened an outlet in the Auburn facility. Mayor Joe Powell said Heritage was probably Auburn’s biggest single source for sales tax revenue. Virden lost two of its three new-car dealerships in the past year. Illiopolis has been without a new-car dealer since 2002, when Graves Motor Co., a Ford-Mercury dealership established in 1936, shut down. The town lost Waddell Chevrolet in 1992. Executives of Chrysler and General Motors have said there are too many dealers competing with each other for sales. Many of the dealerships date to the 1940s and 1950s, when motorists lived farther apart and the U.S. domestic auto industry topped the world. But after losing customers and market share to foreign competitors, the two automakers said their companies need to scale back operations to become profitable. They want fewer dealers to sell more cars. Sander said the number of new-car dealers in Illinois is around 1,000, down from 1,400 just 10 years ago. The loss of new-car dealers will be felt along Main Street in more ways than just dwindling sales tax revenue. “A lot of times, car dealers are the first to contribute to the Boy Scouts, to youth baseball teams, to the parks,” Sander said. But in many towns and villages, if someone wants a new car, they’ll have to travel. “They’re going to have to go to the communities around them,” Sander said. “They’re going to have to drive a little farther. But the domestics are well populated throughout the state.” Chris Dettro can be reached at 788-1510. Copyright 2009 The State Journal-Register. Some rights reserved