While Auto Industry Reeled, Bristol Pair Started a New Venture

Never accuse Mitch Walters and Tom Hall of being timid.

A little crazy perhaps, but not timid.

In November, with the national economy in free fall, auto sales continuing to tumble and American automakers seeking refuge from impending collapse, the Twin City businessmen bought a Chrysler dealership.

Not a thriving, bustling dealership with substantial inventory, mind you, but the smallest-volume facility in the Tri-Cities, where the previous owners had turned out the lights and were in the process of shutting the doors behind them.

“We came in at what, for our market, was probably the worst possible time,” Hall said. “But we looked at it as the best possible time – to come in hopefully when it is at its lowest and build the business back up.”

The men bought the former Tim Marburger Chrysler-Jeep-Dodge store on West State Street after the North Carolina-based owners opted to close and issue pink slips to more than 20 employees.

Walters, who owns a group of dealerships in Bristol, Johnson City, Tenn., and Boone, N.C., said the decision was a “crap shoot.”

“A lot of people thought we weren’t very intelligent, including my family,” Walters said. “But that’s the time you’re supposed to make moves. You’re supposed to buy when things are down and sell when things are up.”

Framed photographs on Hall’s office wall recount the day the two signed the purchase agreement – the same day the stock market posted a record one-day loss.

While they are transplants – Walters was born in Ohio and Hall in West Virginia – both men have lived in the Tri-Cities and worked in the local car business for years. It was that hometown touch, Hall said, that seemed to be missing from the previous owners.

“They’d [Marburger] been here seven years and never could capture the glory Jay Johnson had here. Chrysler, Jeep and Dodge has always done real well in this area. Being local people, Mitch and I felt like that was probably the main reason why this store didn’t continue to succeed – that they [Marburger] never had any local influence in management or ownership,” Hall said.

Attempts to speak with someone at Marburger’s dealership in Concord, N.C., were unsuccessful.

Walters and Hall rehired most of the former employees who hadn’t taken jobs elsewhere and reopened under the Friendship flag in November. Soon thereafter, they had to deal with Chrysler’s bankruptcy and the unexpected news that almost 800 U.S. stores were targeted for closure or could lose their Chrysler dealership.

While Alley’s Chrysler-Dodge and Don Hill Jeep in Kingsport were both on the list to lose franchises, the Twin City dealership escaped that ax.
Tom Slagle, sales manager at Alley’s, said Chrysler officials didn’t give a reason for their decision.

“Our business is primarily used cars at this time, but we are selling new Jaguars and Saabs,” Slagle said, adding that there are no plans to close the business.
Hall said that time was “scary. I had some nights where I may not have gotten the sleep I needed, but I never closed my eyes with the finality I wasn’t going to be in business. I just knew the country was going to support us and help us through this.”

Chrysler used a number of factors in evaluating its dealer network, Hall said, adding that the new Friendship group met all of them.

“I’m responsible for my market area where they want to see so many registrations from that area come from my store, based on the number of units they expect you to sell. It’s also based on profitability – are you selling cars and making money? You can’t operate a store, if the store is constantly in distress. You also get graded by customers and they were happy with our sales and service customer service index scores,” Hall said.

In addition, Chrysler wants all its dealers to sell all three of its brands – Chrysler, Jeep and Dodge at one location, Hall said.

In Kingsport, Hill had the Jeep franchise, while Alley’s had the other two.

“I can’t answer to the reason they decided to close Alley’s, but we were doing the things Chrysler asked us to do. We were very fortunate, but we worked very
hard to do that,” Hall said.

Chrysler’s philosophy in closing dealers ultimately related to their bottom line, Walters said.

“Their [Chrysler] philosophy is that fewer dealers should be stronger financially. If there’s fewer of us, we’re more successful and they’ve got a stronger network.

The same is true with the GM closures,” Walters said. “If we wouldn’t have bought it, that dealership would have closed. I guarantee that. I think we helped Bristol, Tenn., keep one less building empty.”

Securing sufficient inventory to sell has been another problem that plagued the new owners since they took over, Hall said. Despite that, every aspect of the business has been profitable every month and each month has seen some improvement over the previous one, Hall said.

“We had very limited inventory, but we sold a number of used cars. Then we started getting some new inventory, so about February is when we started seeing a major influx of people starting to come back,” Hall said. “Then they [Chrysler] filed bankruptcy and shut the factories down. That put some more limitations on us, but it’s not stopped us.”

In recent months, used cars have become more expensive for dealers to acquire and the closed factories also mean less access to rental fleets, which turn over regularly.

Lack of new car inventory likely cost the dealership a number of sales last month, Hall said.

“Over the last few days, they’ve opened the factories back up, the order banks are open again and the factories are going to be building new 2010 vehicles. I’ve just ordered 40 new ones over the last few days. If you walk my inventory today, there are some limitations there just because the lack of the product that has been out there,” Hall said.

Despite those “limitations” both men said they believe the dealership’s future is positive.

“I’m very optimistic,” Walters said. “That could very well be one of my best dealerships and one of the best in the region. It could turn the other way too, but we’ve just decided to forge ahead.”

Hall concurs.

“We’re proud to be here. I spent 15 years in a Honda facility with a great organization. But I’ve never been so happy to have made the decision to come out here and do this. I know it’s got a bright future.”

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