Fagan official positive about dealership's future
JANESVILLE Bob Clapper describes himself as a positive guy.
Still, the co-owner of Fagan Chevrolet-Cadillac knows the company might go through a rough patch in the next few years with the national economy in crisis and SUV production ending at the Janesville General Motors plant next week.
"We'd be foolish to not be concerned," he said. "It isn't just the plant closing that's going to affect us locally, but it's everything else that's going on with it."
But Clapper said the company is prepared to ride out the storm.
"Fortunately, we're a long-term business," he said. "As a company, we're positioned well. We fully plan on emerging from this just as strong as we ever were."
No one knows exactly what will happen to Janesville businesses after local SUV production ends, taking several local auto suppliers with it. But Fagan, 3601 E. Milwaukee St., Janesville, could be affected more than other businesses.
In Janesville, the people who made GM vehicles were also some of the company's best customers. About 65 percent of Fagan customers use the GM discount, which extends to children, grandchildren, parents, grandparents, in-laws and siblings.
The discount ranges from a few hundred dollars to $10,000, depending on the make, model and year of the vehicle. Auto supply employees also receive a discount, though not the same one GM employees receive.
Those discounts won't disappear after the plant closes, Clapper said. Retirees and their families will continue to get discounts, and laid-off workers and their families get the discounts as long as they're with the company.
In fact, many former employees will get the discounts through retired parents because so many children followed their parents to GM, he said.
Still, the dealership already has seen customers change their habits. It sold 16 percent fewer new cars and 11 percent more used cars through October than it did in the first 10 months of 2007.
The dealership is about even with last year in terms of profit because it has cut costs, Clapper said.
The dealership reduced advertising and lowered its inventory of new cars, replacing them with lower-priced used cars, he said.
"You become a little more competitive," he said. "You watch your expenses closer."
That's how Clapper believes Fagan will get through the economic recession. He doesn't plan to cut service, he said.
"Our philosophy, I guess, is we're going forward; we're not going backward," he said.
Bailout seen as critical
Bob Clapper, co-owner of Fagan Chevrolet-Cadillac, is confident his company will ride out the economic recession—unless General Motors goes into bankruptcy.
"I'm fairly certain that (bankruptcy) would hold our new-car sales back considerably," he said. "I just don't think customers would rush to the showroom to buy a product from a company in bankruptcy."
Clapper hopes the government approves billions of dollars in loans to help the Big Three stay afloat until they can become profitable companies again. The latest proposal would extend $14 billion to the automakers from the $700 billion bailout package approved for financial institutions in October.
More than a million people work at auto dealerships across the country, Clapper said. Those people will struggle if one of the Big Three declares bankruptcy, he said.
"The people that are against the bailout don't realize the impact that it could ultimately have with employment," he said.
Some have argued that people have shown willingness to buy products from other companies in bankruptcy, such as United Airlines, but Clapper said a car is different.
"It's not like buying an airline ticket for $200 or $300," he said. "It's a major purchase."