Kerry T. Pacifico entered the Ford dealership business in 1954. Fourteen Ford dealers sold cars in Philadelphia then, and they were a happy lot. A Ford franchise was a ticket to family prosperity, jobs for relatives, and cash for country club fees.
Today there are four Ford dealers in the city, among them Pacifico's on Essington Avenue near the airport. But even with reduced competition, sales are hurting.
A plummeting new-vehicle market share at Ford Motor Co., maybe the sickest of Detroit's Big Three automakers, has led to anemic customer traffic. In 1999, the Pacifico dealership sold about 300 new and used vehicles a month; in 2007, it expects to sell 190 a month, which is an improvement from a nadir in 2002, when vehicle sales sank to 140.
"We're on an upswing. We can't go any lower. Other dealers are closing and that will help us," said an optimistic Pacifico, 83, in his memorabilia-filled office.
Economic reality is hitting Ford auto dealers. According to a leading trade publication, the Philadelphia region - even with the closings that have taken place - has the third-highest concentration of Ford dealerships in the nation. There are just too many of them, dealers say, and one-fifth of the 50 or 60 Ford dealers in the region could eventually close. Some have gone out of business in 2007, such as Norristown Ford in Lower Providence Township and Holman Ford in Glassboro.
This is part of the broad problem at Ford, General Motors Corp. and Chrysler, the so-called Big Three in Detroit that depended so heavily on gas-guzzler SUVs and pickup trucks when gasoline spiked to $3 a gallon. The companies don't manufacture the vehicles that can keep afloat the vast dealer-networks established in the last 50 or 60 years. U.S. auto-assembly plants have closed, and tens of thousands of auto workers lost jobs.
Now dealers face harsh choices - holding on, or closing. The most vulnerable are single-franchise dealers who cannot convert a dissatisfied customer of one brand into a satisfied purchaser of another brand on the lot. It's likely that hundreds of Ford, Lincoln-Mercury, Dodge, Chrysler and Chevrolet dealerships will close nationwide in the next few years, experts say.
Import dealers, such as those selling Toyota Motor Corp. and Honda Motor Co. Ltd. fuel-efficient compacts and sedans, are growing. But, overall, the Bureau of Labor Statistics reports that Pennsylvania lost 4,000 jobs at auto dealers since peak employment for the sector in 2004. New Jersey dealers cut 1,000 jobs. In that period, the Pennsylvania economy added 169,000 jobs and the New Jersey economy expanded by 103,000.
"There is too much product and too many dealers," said Carl Weirick, general manager of Anthony D'Ambrosio Dodge Chrysler Jeep in Elverson, Chester County. "Last year was just awful with DaimlerChrysler." He said the company's products were well-made but product rollouts fell flat and the company does not consistently manufacture vehicles with options people want to purchase, loading dealers with tough-to-move inventory.
On Monday, DaimlerChrysler said it would sell most of the Chrysler business to the New York private-equity firm Cerberus Capital Management L.P. for $7.4 billion. The proposed deal is expected to close this summer.
A day after it was announced, DaimlerChrysler AG, the German parent company, announced that Chrysler lost $2 billion in the first three months of 2007 because of weak sales and costs associated with plant closings and cutting 13,000 jobs.
With domestic nameplates there are "too many dealers fighting for the same business," said Richard Weitzman, a director in Philadelphia with the Staubach Co., which has a thriving national business selling, merging and redeveloping auto-dealer lots. The trends "have been building since the 1970s and '80s. . . . It's reached the tipping point in the last couple of years," Weitzman said.
Ford, in particular, is teetering. Ward's Dealer Business says that Ford is selling about one million fewer vehicles a year than it did in 2000. In the Philadelphia area, Norristown Ford in Lower Providence Township closed in April. The dealership straddled Ridge Pike, with cars on the north side and trucks on the south.
"It was amazing how quickly they closed their doors," said Joseph Dunbar, Lower Providence township manager. Wawa has proposed a super store, with gas pumps, for the dealership property on one side of the street, he said. Discussions have been held for a used-vehicle dealership on the other.
On the Main Line, a Fred Beans Ford-Lincoln-Mercury on East Lancaster Avenue in Wynnewood closed in the last month. The Lincoln-Mercury franchise moved to Pacifico Marple Ford in Broomall, Delaware County, while the Ford franchise was retired. Pacifico Marple Ford is owned and operated by Kerry Pacifico's nephews - Joseph David Pacifico and Michael Pacifico - and Domenic A. Siravo.
"It's good for us because it aligns the number of dealers in the area with current sales levels," Michael Pacifico said. The Beans dealership was about six miles away.
In South Jersey, Holman Ford in Glassboro closed in January, when sales fell to a break-even level, said Frank Beideman, vice president of resource development at Holman Enterprises, of Pennsauken, one of the nation's largest privately owned dealers.
Holman bought the Glassboro dealership in 1999 and "at the time, the Ford market share was pretty good around here," Beideman said. He estimates that new-vehicle Ford sales declined about half since the late 1990s at the dealership. "As the market share eroded, we had to right-size, just as Ford is doing," he said. "This was one of the few times we closed a dealership completely," he said.
Holman Enterprises operates three Saturn, three Lincoln-Mercury, two Ford, two Infiniti, one Volvo, one Jaguar and one Mazda Motor Corp. dealership in South Jersey. It also has a dealership cluster in South Florida.
The firm agonized over the decision to close Glassboro, which employed 44 people, Beideman said.
Ford is "not fixing the dealership problem. Many of these single-point stores will just go out of business," he said, referring to dealerships with one nameplate.
Holman Enterprises also owns a Ford dealership in nearby Turnersville, which remains open. The UnitedAuto Group Inc., a publicly traded company, has invested about $85 million in the last few years into a large multifranchise dealership in Turnersville. Franchises on the 66-acre site: Toyota, Nissan Motor Co. Ltd., BMW, Acura, Honda, Chevrolet, Cadillac, Hummer, and Hyundai Motor Co.
Weitzman, of Staubach, said professionally run dealer groups had responded to sinking market conditions and closed ailing dealerships. Family-owned dealerships have a harder time with the decision.
"It's a very emotional thing, and they will cling to it beyond when it makes sense," Weitzman said. "If you're a little Ford guy, for a couple of generations it was a great thing to have."
He approaches dealers cautiously. "It's sensitive," he said. "Sometimes I'll call a guy and get hung up on. But it's not personal."