Changed World

As executive director and general counsel of the Metro Tulsa Automobile Dealers Association, attorney W. Kirk Turner has a finger on the pulse of the city’s car dealers.
In the past six months, the demands of that position have been working to calm their palpitations.
While Tulsa’s auto dealers have apparently escaped the brunt of the shakeout in the auto industry, they have had to streamline their operations and their outlook is tempered by caution, spokesmen for the TADA said.
So what has been the attitude among Tulsa auto dealers during the turmoil?
“If you had asked me that question six months ago it would have been complete uncertainty,” said Turner, an attorney with Newton O’Connor Turner & Ketchum PC who specialize in auto industry legal issues. “With the economy hitting the way it hit and the troubles of Chrysler, General Motors and Ford during that time, it was a very uncertain time.
“I would say today it is stabilized. It’s certainly not back where it was, but I think everybody feels like they are out of this big storm, and are now trying to figure out where we go from here.”
Tom Bloomfield, general manager of Don Thornton Cadillac Hummer Saab at 3939 S. Memorial Drive and president of the TADA, said refinements in the way the dealers run their businesses have prepared them for the changes in the industry.
“Six months ago, even eight months ago, we were going through the shock of a dramatic change in demand from an industry that was selling 15 million units to 8.5 or 9 million,” he said. “The way you stocked inventory, the way you managed your business, your expense structure – none of that fit in with the almost 35-40 percent decrease that just came upon us.
“We have made changes to our businesses to adjust for it – some through attrition, some through cutting,” Bloomfield said.
He said with changes he has made at his dealership he believes “we can handle this with our business now if this is all this is going to be or we are probably in a better position when the market returns.”
“At the same time, the dealers for Chrysler, General Motors and Ford all have been nervous about the structure of their companies, and how that’s going to affect their future and even their existence – as almost 800 Chrysler dealers and 1,200-1,400 GM dealers have found out,” he said.
Tulsa Appears “Unaffected”
Although specific dealership closings by General Motors have not been announced, both Turner and Bloomfield said they are not aware of any closings planned for Tulsa.
“We are not aware of any local Tulsa GM dealership that has been terminated, and there certainly aren’t any Chrysler dealerships that have been terminated,” Turner said.
Bloomfield agreed that although “we don’t really know how many GM dealers – we don’t know who is going to close – we think Tulsa is unaffected.”
“But if I were a dealer who was going to be wound down, I’m not sure I would say that right now,” he said. “I don’t know that I would be prepared to tell my employees that because, obviously, they are going to leave and look for jobs, and I have to maintain the business long enough to dispose of the product and deal with the real estate.”
Turner and Bloomfield said they believe Tulsa dealerships have not been targeted for closings because the market is not crowded as it is in other metropolitan areas and because the brands have made moves in recent years to realign themselves.
“I think our market has regulated itself,” Turner said. “Somebody could argue we may have one too many, but for the most part we are not flooded by tons of dealerships. If you go to a town of this size in the Northeast or on the East Coast, there may be 12-15 Chevy dealers – a lot.”
While Chrysler had announced that 12 dealerships in Oklahoma would be affected – Oakley Pontiac-Buick in Bartlesville the closest to Tulsa – “I think we only saw 4-5 actual rooftops close,” said Bloomfield. “They consolidated some guys.”
He said the only information available on the action General Motors will take in Oklahoma is that 17 rooftops will close, but that GM will not reveal the affected dealerships.
He said there have been reductions in the number of dealers carrying GM brands, primarily Cadillac.
“If you had a multi-line General Motors store in Oklahoma, you probably had Cadillac, too. No one knows how many we are going to end up with, but it is going to be far fewer. I have heard anywhere between two and five that will be thereafter, and I think we had about 28,” Bloomfield said. “They are trying to position it closer to the business models that Mercedes, BMW, Audi or Lexus kind of adhere to – where there are fewer locations in bigger metros.”
He said that kind of realignment will drive more sales through fewer dealerships, a key to the success of the restructured industry.
“What it will give us is what some of our competitors, the imports have enjoyed, and that’s throughput – where we can actually sell enough vehicles to have a business that can provide the customer experience and the customer support that the manufacturer would like the customer to have, and what we the dealers would like the customer to have,” he said.
The Legal Outlook
Turner, who has practiced law in Tulsa for 20 years has spent the last 12-15 years helping dealers with their legal issues, including compliance, prevention issues especially in employment and labor, in dealing with claims and litigation that comes up with regard to transactions or to issues with manufacturers.
“Obviously we have seen a lot of that recently with the Chrysler and GM stuff that is going on and trying to advise dealers with regard to their rights,” he said.
In his position with the TADA and as a member of the National Association of Dealer Counsel, Turner has worked to help dealers “stay abreast of what’s going on legislatively,”
While Tulsa is not “the hotbed of litigation like some of these other areas” with dealership franchise agreements being overridden by bankruptcy proceedings, “its been a complete turmoil,” Turner said.
He said that even though many states, including Oklahoma, have strong laws protecting franchise agreements, “what GM and Chrysler both did was avoid those obligations under the state laws by filing bankruptcy, and the bankruptcy law preempts state law so they basically skirted all of those responsibilities.”
He said those concerns have prompted an initiative “that is trying to restore (those rights) legislatively, to have Congress come in and say, despite what the bankruptcy court did, we are going to require you to go through the state law process for these dealers that you terminated.”
Dealers Remain Cautious
Bloomfield, who has been a part of the Tulsa auto industry since 1988, said his outlook for the industry in Tulsa is to be “cautiously optimistic.”
“I think everybody is still cautious. The market changing so quickly made us all cautious,” he said. “I believe that with the government’s help that General Motors is going to come through this and they are going to be positioned to be a viable company.”
He said the latest J.D. Power and Associates rankings moved Cadillac from 10th to third in quality.
“They have shown that they can build a good quality product and that’s really all we need,” Bloomfield said. “We can provide a customer experience as dealers.”
Acknowledging the bankruptcy process for GM and Chrysler has been painful and expensive, Bloomfield credited the bailouts and government involvement with allowing the firms to go through the process at “an unheard of speed of exit.”
As a result, the process has saved the companies and prevented an even worse scenario, he said.
“If they had gone bankrupt back in December, we would have all been in a great deal of trouble,” Bloomfield said. “Had they not been provided financing by the government, it would have been a freefall bankruptcy, and they could have been in bankruptcy for years. It would have been devastating.”



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