Tuesday, September 15, 2009
GMAC seizes assets of Joseph Pontiac in Fenton; owner also operates Joseph Chevrolet in Millington
FENTON, Michigan - Add Joseph Pontiac to the list of General Motors dealerships faced with extinction.
The parking lot in Fenton sits empty and mega car dealer Joe Hood stands to lose much more than just the new Pontiacs that once filled the dealership along Silver Parkway.
Hood, in an interview Friday that left his voice breaking, said he has days to come up with about $7 million to pay off a mortgage, inventory and long-term notes he owes to GMAC. Within the past few weeks, Hood said the lender has seized his assets after he failed to pay the balance on about four to five vehicles that had been delivered to customers.
If he doesn't come up with the money, his assets, including equipment and the buildings and land at 16555 Silver Parkway, could be auctioned off.
Also, Hood has a purchase agreement with another dealer to sell Joseph Chevrolet in the Tuscola County village of Millington, which remains open. (A Ford dealership he operates, Joseph Ford in Grand Blanc Township, is not affected.)
"Had Cash for Clunkers not happened, had GMAC worked with me a little bit, I'd still be there," said Hood, 61, known for his quirky TV commercials. "My only hope is that I've got a guy on the East Coast (who may) bring me enough money to pay GMAC off totally."
Joseph isn't the only area car dealership that has run into recent financial troubles.
In May, GMAC took back cars on the lot at the Zehnder Chevrolet dealership, 511 N. Main, in Frankenmuth. The dealership, owned by Martin Zehnder, subsequently closed.
Zehnder, 72, told The Saginaw News that a drop in car sales and plans by GM to cancel his franchise led to his decision to close the business.
Hood said when GM announced it was phasing out Pontiac, he was "pretty devastated," but came up with a plan for a new used car superstore. He said he was going to receive about $600,000 from GM to wind down his Pontiac business, had been approved by another company for used car inventory, and that everything was going as planned until late July. He even was selling off his last new cars on the lot.
"We can change this to an independent used car lot, we continue employment of people, we can continue selling cars," said Hood, owner of Joseph Auto Group.
But without payments from the government on new cars he sold through Cash for Clunkers, not having received "contracts in transit" payments for cars sold and not having received rebate payments from GM, Hood in early August didn't have all the cash to pay GMAC when the company came looking for vehicles to seize.
"GMAC found out that I did not have enough money in my account, they immediately shut everything down," he said. "They shot down all my accounts. Now I have zero control over my cash."
Hood said he understands GMAC has its rights to seize property, but said with a bit more flexibility from GMAC he believes he could have paid what he owed GMAC on the cars in about a month.
GMAC spokesman Michael Stoller said seizing vehicles isn't something that happens over a couple of weeks.
"We've been working with Joseph Hood and his dealerships for many months trying to find a resolution," Stoller said. "GMAC works with its dealers to the extent possible, but there comes a point in time when we can no longer extend credit lines and would be required to reclaim our collateral in a default situation."
Stoller wouldn't comment specifically on Hood's debt to GMAC, but said they have worked collaboratively and cooperatively with Hood and "we're willing, to a point, to work with him if there's an opportunity to resolve this in both our affairs."
Signs on the Joseph Pontiac building in big, bright letters say "Coming Soon Used Care Superstore Sales & Service." But there's a smaller sign posted on the door that reads Credit Financial Services has moved to a new location in Grand Blanc Township. It's the same location as Hood's Ford dealership.
Advertisements have said Joseph Pontiac would be converted into a used car lot with a service center featuring hourly labor charges priced below the competition.
That's what resident Harry Walters, 70, of Fenton Township thought was happening after Hood lost his Pontiac franchise. But the sudden closure has left him and other residents wondering if it's closed for good.
"It's a shame that it's going to be vacant because it's such a big area," said Walters, a retired machinist.
Michael Burns, Fenton's assistant city manager and Downtown Development Authority director, said that because he doesn't know what Hood is doing with the property, he didn't want to comment.
Standalone Pontiac dealers have known for months that they would lose their new vehicle lineup as GM announced it would phase out the Pontiac brand by the end of 2010.
In April, Hood said the dealership that had been located in Fenton since 1996 and dates back to 1987, had 45 employees.
Now Hood is hoping with a new East Coast business partner he can pay off his GMAC balance to save Joseph Pontiac, hire his staff back and open the used car store.
Hood said with Michigan's economy and job situation, someone needs to help small businesses stay in business so they can continue providing jobs.
"You would think that somebody with some power, could say 'stop, we want to get the bottom of this before total destruction occurs,'" Hood said. "I just don't know what is."
State Rep. Paul Scott, R-Grand Blanc, said he has been in contact with state Treasury officials on Hood's sales tax payments and the state Attorney General's office to work on legal remedies for Hood and other dealers that fall into similar situations.
Scott said Hood and his company have done a lot for the community over the years, including providing jobs for citizens.
"The governor really should come out ... and try to create some incentives for GMAC to try and work out deals with auto dealer owners such as Joe Hood to try to keep them in business," Scott said. "The amount of job loss that could happen means less revenues for the state, one, and it's going to exacerbate our unemployment problem, the amount of people needing unemployment checks, welfare assistance, Medicaid. It's not a blow our state can take right now."
Joseph-Fenton Land LLC hasn't paid winter 2008 taxes on three parcels along Silver Parkway and summer taxes of nearly $60,000 for the parcels are due mid month.
Genesee County Treasurer records show a winter 2008 delinquent tax balance of $15,400.
One of the parcels, vacant land listed by Mansour Realty Inc., appears to be for sale for $3.9 million.
A sign on 13.75-acre property with frontage along U.S. 23 says the land is under contract. The Flint Journal could not reach Mansour Realty officials for comment.