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No 'Moore' Ford.

No |Moore' Ford

Skidding Cash Flow, Loss Of Credibility Make Sale Of Dealer Likely

It was almost closing time last week on a cold and drizzly night at One Moore Ford. A salesman was working with a lone customer in the dim outdoor light and three young men stood in a circle and talked in the dark among parked cars. They were wearing heavy coats and gloves and smoke rose from their mouths.

Were they employees discussing the possibility that their boss was about to sell the $80-million-a-year dealership? Were they Ford Motor Credit personnel placed on-site to monitor sales? Were they happy Ford owners comparing notes?

Rumor and speculation about One Moore Ford's future and financial woes continue to hang like bad weather over the state's largest Ford dealership, where a string of problems has led to a rapid, near-collapse.

In late 1989, Moore took a $525,000 loan to cover cash flow problems; in November of 1990, a $520 check written to a customer to refund a deposit wouldn't, and still won't, clear the bank; in December, the dealer awarded a Hyundai Scoupe as a contest prize but has yet to deliver; then, Ford Motor Credit came to town, and this was not the first time; finally, Moore dropped his Suzuki dealership Dec. 17 due to "economic conditions."

Individual pieces of a puzzle by themselves often don't look like much. It's not until you get several pieces together that a picture begins to take shape. So it is with One Moore Ford's current situation.

Together, these instances outline a picture of dwindling cash flow, a loss of credibility and, in short, trouble for the longtime, respected car dealer.

Insiders describe 44-year-old owner Michael Moore as well-meaning and honorable, but prey to bad advice which has boosted overhead and bad decisions.

Moore isn't talking and is outwardly upbeat, say observers. But among friends, he is despondent as he faces the almost certain sale of the dealership -- started by his father and the place Moore has worked all his life -- to Arkla Inc. CEO Thomas F. "Mack" McLarty.

The consensus among industry insiders is that as the company grew and expanded with new franchises, it took on too much overhead. This led to a cash crisis which has now degenerated into a mark on the company's reputation.

"In the car business, you lose credibility real, real quick," says one source. "They've done things that have caused them a tremendous loss of credibility."

"Out Of Trust"

Speculation within the industry is that the company currently is being monitored by Ford Motor Credit because of what is known as selling or dealing "out of trust."

"This is when vehicles are still on the books, as if they are in inventory, when they've really been sold already," says Jon Harmon, a public affairs manager with FMC.

When a dealer purchases vehicles for its showroom floor, it finances them and pays the creditor interest until the cars are sold. One by one, as the cars are sold, the dealer forwards the money and the unit is taken off the books. At least, that's how it is supposed to work.

Harmon says the FMC dealer agreements stipulate dealers are to "pay forthwith."

"As a practical matter, we give them normal processing time," he says. "A smaller dealer would pay the next day; a larger dealer who has a lot of cars to process might need three or four days. But basically, it's immediately."

Another industry source says the dealer usually gets a certificate of origin with a car. If a dealer has broken trust, it must forward payment in full for a car before it can get the certificate to pass along to the car's buyer. This insures the dealer will pay promptly for the vehicle.

"It just means they don't trust you anymore," the source says.

It is easy to see how a dealer, finding himself in a cash crunch, could abuse the system, borrowing time and money from the credit company.

Two sources say this isn't the first time FMC has been on One Moore Ford's lot. One incident two or three years ago involved a minor problem and FMC only stayed for a couple of days.

When asked about another occurrence, Harmon says it was "not to this extent in the past. That's as much as I can elaborate."

Backtracking

Was something going on back then that triggered the problems? Yes.

In 1986, Moore added his second franchise, Hyundai, which had some hot products at the time. When Hyundai requested a "stand-alone" showroom, Moore obliged.

"We could be very strict back then," says Ashley Lord in Hyundai's regional office. Not so, anymore. The company, plagued with service problems that were costly for dealers, has gone from selling 328,000 units in 1987 to 137,000 in 1990. Hyundai now allows "dualing," or combining floor space with the other lines of their dealers.

The separate Hyundai facility, built in 1988 one mile north of One Moore Ford, came with a $2 million price tag and was probably the beginning of the end. To cut costs, Moore since has vacated the building but has been unable to sell it.

In May 1990, Terry Mercing, Moore's CPA and secretary-treasurer, is quoted as saying, "we do have multiple negotiations going on" and suggested a deal should be inked before the year's end. However, "For sale or lease" signs are still on the property, although they do have a different name and phone number on them today.

Two more new franchises were soon added -- Suzuki (1988) and Daihatsu (1989) -- bringing their own overhead increases. And other problems began to manifest themselves.

In late 1989, Moore had to go to Twin City Bank (where he has been a member of the board since 1985) for a hefty loan of $525,000 to cover overdrafts on his checking account. In loan paperwork, the overdrafts are blamed on an "inadvertent accounting error."

In late 1990, two quirky instances fueled press speculation of cash-flow problems: the $520 company check to a customer to refund her deposit on a car (the check still won't clear more than two months later); and the promotional prize car still held hostage a month after it was awarded. On the latter, Moore employees claim a "holdup with the paperwork."

The evidence mounted when FMC placed its people at One Moore Ford last month and the dealership quietly disposed of the Suzuki line. In a letter to Suzuki Corp. dated Dec. 17, 1990, Moore announced his voluntary termination as a dealer and said the action was due to "economic conditions."

All this lends credence to street talk that McLarty Management Co. soon may swoop down and rescue One Moore Ford from an ugly demise. Some say Mike Moore will be asked to stay on as general manager. Jack Caldwell, McLarty's VP, has postponed any announcement on the deal.

In late December, Caldwell said he hoped to have news by Jan. 2 and the Gazette reported a Moore employee said her boss would be unavailable for comment until the 2nd. One could infer the parties had agreed on that tentative date to talk, but then hit a snag in negotiations.

If the dealership is not sold to McLarty, it will face increasing competition and a growing recession in the future, saddled with large amounts of debt and weakened credibility.

Whatever the outcome, an observer concludes, "Mike Moore is a very honest person and is grieving very dearly over this."

The Growth Of One Moore Ford

Moore Ford, as it was called then, was founded in 1957 by W.H. Moore. Assets of the company were sold to Michael O. Moore, a son, in 1980 and the name was soon changed to One Moore Ford.

Other franchises were added as follows:

1986: The Hyundai dealership was acquired. February 1988: The Suzuki line was added. It was "voluntary terminated" by Moore Dec. 17, 1990. August 1989: Moore signed on as a Daihatsu dealer.

In July 1990, Auto Age reported One Moore Ford was the largest dealer in the state and the only Arkansas dealer to make their top 500 list. They were ranked 294th in the country.

The body shop was ranked 75th and for the third straight year, the dealership was Ford's "Distinguished Achievement Award for Quality."

PHOTO : BEST AND WORST OF 1990: Auto Age magazine ranked One Moore Ford as the 294th largest auto dealer in the country, and Ford awarded the dealer high honors just before signs of financial stress began to show.
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Article Details
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Title Annotation:includes related article; Ford dealership
Author:Ford, Kelly
Publication:Arkansas Business
Article Type:company profile
Date:Jan 14, 1991
Words:1426
Previous Article:Building leaders.
Next Article:Arkansas Business of the Year 1990.
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