May 4, 2009 – Sign of the times: Dealership goes from cars to repossessions

By Karin Gelschus
Associate Editor
Adaptation is often key to surviving changing times, and the current economic situation has pushed some companies to do just that to stay in business. One of half a dozen new car dealerships that fell victim to the economic downturn in San Bernardino, Calif., changed its focus so it could reopen a few months later.
A proposal from a local credit union allowed Center Chevrolet to reinvent itself. Now known as Arrowhead Motors, the dealership sells repossessed vehicles it gets from Arrowhead Credit Union.
After a few months of working out the details, Cindy Cross, general manager of Arrowhead Motors, says they reopened for business in March selling mainly repossessed vehicles and some on consignment, including RVs, motorcycles, ATVs, UTVs and boats.
The partnership is a win-win situation for both parties, says Cross. “We had an empty lot and they had vehicles,” she said, referring to the credit union. “They have an opportunity here to mitigate some of their losses, and we have an opportunity here to make some money, so it works out well for both of us.
“We’re excited. It’s been really interesting. It’s been a tough market in the San Bernardino area. It’s nice to see something coming back,” she added.

The workings
While the dealership was able to reopen, its staff took a considerable hit. Cross says in Center Chevrolet’s hay day, it had about 140 employees, but now they’re down to four. They are in the process of hiring a couple of sales people, but they don’t plan to get to nearly the size it once was.
“We had a very large body shop and parts and service department,” she said. “That’s where most of our employees were before and now it’s strictly sales.”
The staff size isn’t the only change the dealership had to adjust to. The process of obtaining and selling the vehicles is different than that of a new car dealership.
Some of the legalities slowed the opening of the business, notes Cross. Even though the credit union has had some vehicles in their repossession lots for a month or so, once Arrowhead Motors gets them, they have to wait about two weeks before they can recondition and prepare them to be sold.
“Once it’s moved from the auction or wherever, they have to give the prior owners another 15-day notice to get their vehicle if they can get their account current,” she explained. “We have this influx of vehicles coming in. Once we get everything up and running, it will be a lot smoother because the vehicles will be trickling in vs. having
100 vehicles right at the very beginning.”
The dealership expects to sell 50-60 vehicles per month.
“We’ve had a lot of interest with a few people coming in and looking,” Cross said. “The fact that it’s unique is causing a big stir and we’re excited. It’s a great opportunity because we have the whole range (of vehicles). There are people out there that have been holding onto their money waiting to see if they can get a good deal, and we think we can facilitate that.”
Arrowhead Credit Union holds the paper of the vehicles like they did before the partnership, but Cross says they can ease the process of selling the vehicles.
The vehicles are posted on Arrowhead Motors’ Web site, but sales are only consummated at the dealership, and the gross profit is split between the companies, notes Cross.

Inventory
With the amount of inventory currently available, Cross says Arrowhead Credit Union has more than enough vehicles to supply the dealership.
“When the economy turns around and there aren’t as many repossessions out there that might be a possibility,” Cross said, referring to obtaining vehicles from other credit unions. “We would discuss that with Arrowhead Union because they have the first right of refusal on that type of thing. We’ll have to see in the future, but there are always repossessed vehicles out there. There’s always the opportunity to sell them.”
Cross adds that there are no plans to go back to a new car franchise. “That’s not a process right now at all. We will continue to have a repossessed lot,” she said.