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After moving from Moberly decades ago and going to work for Joe Machens Ford, Larry Estes was driven by the dream of owning a car dealership.
In the spring of 1986, Estes opened Dodge City Motors on a 10-acre site between Vandiver Drive and Interstate 70 in northeast Columbia and saw his vision become real: lines of new cars and trucks glistening in the sun and reflecting their images in the windows of a dealership flanked by towering Dodge signs with the distinctive red ram’s head logo.
“My family wasn’t in the car business; nothing was given to me,” Estes said from behind a huge wooden desk in his dealership office. “I had to work for it.”
Estes moved up from a salesman to general sales manager at Machens Ford and went on to run University Chrysler. He purchased that dealership, and two years later he split it, opening Dodge City.
But his relationship with Chrysler was troublesome from the beginning, and after quickly selling University Chrysler he diversified by adding a Hyundai dealership 14 years ago on the same lot with Dodge.
Then, on May 14, exactly 20 years from the day that Dodge City Motors opened, Estes got The Call.
A Chrysler representative informed him that the Big Three automaker was taking away his Dodge franchise. He was one of 27 dealers in Missouri and 789 dealers in the United States whose contracts were terminated as of June 9.
“They told me, since I hadn’t done what they wanted me to do and the other folks had agreed to everything, they had decided to take away the Dodge vehicles,” Estes said.
Despite objections from several hundred dealers, not including Estes, a U.S. Bankruptcy Court judge in New York on June 1 approved the government’s plan for reorganizing Chrysler and selling 20 percent of its assets to the Italian carmaker Fiat. The Supreme court declined to hear the appeal. With this last obstacle resolved, Chrysler signed the documents with Fiat on June 10 and exited from bankruptcy.
Following the Chrysler developments closely, Estes knew that he should prepare for the worst. About a year ago, he took out his business account money from Chrysler and started to cut down expenses such as advertising purchases.
“I used to be a real heavy player with Chrysler credit,” he said. “I believe in participating in the factory and programs, in its capital and finance. I quit doing that over a year ago, and that saved me a lot of money.”
In October 2008, not long after Estes sold his stock, a proposed merger with General Motors failed, and Chrysler announced a 25 percent cut in its work force. The next month came the news that Chrysler sales in the U.S. market had plummeted 35 percent in only 12 months, and its CEO said the company could only remain viable by forming an alliance with another automaker and receiving government assistance.
“What I really feel sorry for,” Estes said, “is the moms and dads who have invested years and years of their money in Chrysler stock and General Motors stock, and now it’s worthless. But, the big guys got taken care of. The little guys were out millions and millions of retirement, savings accounts.”
At the beginning of the year, Estes predicted the total sales for 2009 would be about 850 Dodge and Hyundai vehicles, but without the Dodge cars and trucks, he said the total sales will probably end up around 700 vehicles.
In the first quarter of this year, Dodge City Motors sold 172 vehicles compared with 324 in the first quarter of 2008, a decrease of 46.9 percent, according to state Department of Revenue data. The national Chrysler sales for May showed a similar change, a 49.6 percent sales drop compared to May 2008, according to Motor Intelligence.
Estes said he was expecting Chrysler’s downfall, and signed an agreement with the Indian manufacturer Mahindra to start selling its diesel pickup trucks.
“It’s like the grocery store,” Estes said. “If you lose a certain type of bread, you replace it with another type. But, you are still in business. That is exactly what I did.”
“Unlike Chrysler, I know how to cut back expenses,” Estes added. “You don’t have to have a seven-course meal every evening. You may want to get a sandwich. That’s cutting expenses.”
Estes said there’s no question he’ll continue selling Hyundai vehicles, which usually account for about half of the total car sales. When gas prices increased this past year, Hyundai car sales outnumbered the Dodge car sales.
“Last summer, when gas prices were $3 to $4, I couldn’t keep Hyundais on the lot. I could keep Dodges on the lot, though,” he said.
The Dodge City Motors sign and the Dodge signs with the ram’s head logo signs will have to come down, and the name of the dealership will soon be changing on everything from the Web site to the invoices.
“It would most likely be Estes Motors, but a name change is nothing,” he said. “You don’t change the corporation. You don’t change the people. You don’t change anything.”
After the closing notification, Estes had about 100 Dodge vehicles left to sell in less than a month. In two weeks, he managed to sell 50 of them to customers and the rest to other dealers in Missouri.
Estes, who has 45 employees, said that, because he cut expenses, he didn’t have to lay off any staff or service department workers. However, he usually has about 15 sales people, and that number is down to nine.
“Some people, who don’t make enough sales to make a living, choose to find a different job,” he said.
Overall, Estes said he will be fine without Chrysler. “The factory wanted me to sign papers stating they were going to redistribute the vehicles, but I did not need their help.”
In fact, Estes said Chrysler tended to cause problems rather than solve them.
In December 1986, Chrysler asked Estes to build a new Dodge franchise and take on a partner at University Chrysler. He ended up selling University Chrysler and taking on the Hyundai franchise.
Three years ago, Chrysler approached Estes again, asking him to remove his Hyundai franchise and to negotiate a merger with University Chrysler. He refused.
As a result of closing Estes’ Dodge franchise, no Dodge vehicles will be sold in Columbia.
University Chrysler owners Dan Burks and Dave Drane said they would not be surprised if Chrysler asks them to start selling Dodge vehicles in Columbia. They already own a Dodge franchise, Capitol City Chrysler, in Jefferson City.
Estes was supposed to get the first shipment of 20 to 30 Mahindra trucks in April, but Mahindra delayed its distribution until the end of the year so it could do more durability testing. The company decided to test-drive 25 trucks for 3.2 million miles on U.S. roads.
Mahindra’s diesel pick-up trucks can carry 1.5 tons and pull up to three tons while getting 30 to 40 miles a gallon. The price range is between $18,000 and $24,000, which is less than the Dodge trucks’ price range of $25,000 to $55,000, Estes said.
The trucks are built to meet the specifications for the 2015 environmental requirements, but they are yet to be approved by the Environmental Protection Agency.
As of now, Estes is the only dealer in Columbia planning to offer the pick-up trucks.
Dodge City Motors’ service department will also be undergoing a change. It will soon become a diesel-certified service center for all types of vehicle makes. Dodge owners, too, can come in for oil changes and other vehicle maintenance. But, for Chrysler warranty repairs the dealership will only be allowed to arrange transport to the nearest Dodge dealership or auto shop.