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Despite headlines, N.H. auto dealers remain confident.

Automobile dealerships, once one of the mainstays of post-World War II economic growth, have become one of the casualties of the current recession.

An estimated 880 new-car auto dealerships closed across the country in 2008, and as many as 1,000 are expected to close in 2009 due to the dramatic changes in the automobile industry, with both General Motors and Chrysler teetering on the verge of collapse.

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According to the New Hampshire Auto Dealers Association, 14 franchise dealers dosed in the state last year--GM, Mitsubishi and Suzuki dealerships, along with motorcycle and snowmobile franchises.

"It's going to be another tough year," said Peter McNamara, president of the NHADA.

But McNamara said he believes that those dealerships that do survive the recession--and hopefully sidestep the worst of the commercial credit market freeze--will be in a strong position to rebound when the economy strengthens.

Some dealerships are prepared to thrive in part because, ironically, it's now one of the best times to buy a car, with inventories high and dealers and manufacturers offering a wide range of markdowns and incentives.

"There's a possibility we will lose additional dealers in the next year," McNamara said. "But once we reach the end of the tunnel, the dealers that come out of this will be very well proposed to really thrive."

While dealerships will have to get leaner and more efficient to survive, said McNamara, one fundamental role of economic life will continue no matter the recession: "To make money you have to invest money."

Plenty of shake-up expected

Count among those investors Chris Irwin, who now leads The Irwin Zone, a Laconia-based Toyota and Ford dealership founded by his grandfather in 1951. Irwin recently completed a $3 million expansion, which was begun last May before the full force of the economic downturn hit.

The goal of the expansion, said Irwin, was to put the company in position to succeed in changing economic and auto industry environments.

According to Irwin, the expansion "represents confidence in both our manufacturers as well as the great staff we have. We really pride ourselves in having a loyal customer base."

The renovation and expansion that began last May includes 12,000 new square feet of space for Irwin's Ford and Toyota showrooms, a new service write-up area, four new service bays, a new waiting area with a reading room, and a new, state-of-the-art body shop.

The new Toyota showroom is highlighted by an indoor delivery area, a modern lighting layout, radiant in-floor heat, new offices, and a long glass rail with a mezzanine level.

Irwin said the expansion has been +diligently in the works for a few years," and despite the deepening recession, he has no regrets about following through on the investment.

"Certainly back in May things hadn't bottomed out, and no one was predicting what has happened. Up until May, we were having a good sales year--up considerably over 2007," Irwin said. The expansion, he said, "was absolutely the right move. We are better able to serve our customers and we need to be progressive if we are going to thrive."

Irwin, who has not made any reductions in his staff of 80 employees, said he expects to see be plenty of shaking up in the auto industry, Irwin said.

"Domestic manufacturers such as GM and Chrysler will look to reduce, but right-sizing of the industry is needed," he said.

The chief concerns of dealerships like his are fighting the "huge misconception" that no one is buying new cars--and that credit financing is too hard to obtain.

The Irwin Zone isn't the only dealership in the region expanding. Gorhm-based Berlin City Motors recently announced plans to expand its Toyota and Lexus operation in Portland, Maine. It is expected to acquire property to expand its service center and increase its inventory display space by about 20 percent.

In fact, despite the headlines, some dealerships say they're faring well.

Among of them are the six dealerships operated by the Grappone Automotive Group in Bow, said its chief executive and president, Larry Haynes.

"We have roots in the community, and people trust us," said Haynes about the 85-year-old family dealership. "We certainly have seen a softening (in sales), but not the disaster we see in the national press."

According to Haynes, Grappone's Ford sales were up more than 30 percent in 2008 over 2007 and Toyota sales were up "double digits" during the same time period.

And in January, he said, Grappone sold five more cars than it did in January 2008. Haynes said he believes the auto industry shake-up will leave larger dealerships with longtime roots in the community in better shape.

"We certainly think there will be fewer dealers. You have to have some scale to be successful--whether it's lumber, banking or groceries, you need to operate on a large scale to succeed," Haynes said.

Grappone also is making expansion plans, albeit carefully. "We are in the early planning stages for changes in 2010 and 2012," he said. "It's probably on a slower track today than it was 12 months ago."
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Title Annotation:TRANSPORTATION
Author:McCord, Michael
Publication:New Hampshire Business Review
Geographic Code:1U1NH
Date:Apr 10, 2009
Words:846
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