UPDATED at 2:20 p.m. Thursday: A week after Gilroy Pontiac Buick
GMC closed its doors, leaving 26 people without a job, owner Don
Malinoff decided to shutter his nearby Gilroy Ford Lincoln Mercury
franchise, leaving another 31 employees jobless, according to
employees and the store’s general manager.
A week after Gilroy Pontiac Buick GMC closed its doors, leaving 26 people without a job, owner Don Malinoff decided to shutter his nearby Gilroy Ford Lincoln Mercury franchise, leaving another 31 employees jobless, according to employees and the store’s general manager.
Malinoff locked the showroom doors Saturday and then on Tuesday his son, Don Malinoff Jr., and General Manager Joe Lopez met with City Administrator Tom Haglund for 45 minutes to discuss the possibility of the city providing some non-monetary assistance – perhaps a written request from the city to Malinoff’s chief lender, General Motors Acceptance Corporation, asking the financial services company for more breathing room.
“They indicated to me that they were trying to get GMAC off their back,” Haglund said Thursday. “Given Gilroy’s very difficult budget situation, we’re not in a position to offer them any money.”
Haglund, who said he has also received a sit-down request from Gilroy Volkswagen Mazda, referred to the general fund’s $2.3 million deficit and its shrinking reserve that could face insolvency next year if the city council does not act.
Contributing to this year’s fiscal draining is a 27-percent drop in sales tax revenue from auto vendors, which represents about $512,000, according to city figures.
Despite the gray clouds, Haglund said neither Lopez nor Malinoff informed him Tuesday of the Ford dealership’s “imminent” closure, but apparently Malinoff has yet to tell Ford.
“Ford has not received a resignation notice, and we’re still in discussions with Malinoff,” Ford Regional Communications Manager John Clinard said Thursday. “Whatever he chooses to do will be his decision. There’s no pressure from Ford.”
By withholding consumer credit, though, GMAC put unbearable pressure on Malinoff’s dealerships, effectively hoarding $5 billion in federal bailout money from the front lines, Lopez said. GM, which has received $13.4 billion in federal money, has also been stingy with up-front rebate offers, and this double whammy equaled fewer financing options for fewer customers, resulting in a 60-percent drop in sales, Lopez said.
GMAC officials see it another way, pointing to the larger economy and calling for more personal responsibility among dealers.
“GMAC does not put dealers in business nor do we put them out of business. We provide credit based on worthiness, credit history, business volume and other factors,” GMAC Spokesperson Sue Mallino said. Within 24 hours of receiving federal money, Mallino said GMAC offered new financing programs and lowered the minimum credit score for borrowers “so we could indeed finance a broader spectrum of consumers.”
The minimum credit score was lowered from 700 to 621, according to a GMAC press release. The average national credit score is 628, according to Experian, a national credit rating agency.
For each car sold in Gilroy and Morgan Hill, 1 percent of its price returns to the respective cities through sales tax. In an effort to keep the Morgan Hill Ford Store open through the year, the city council there recently granted the store’s request to lower the baseline for sharing the tax revenue from $25 million to $10 million. That way, Ford doesn’t have to make as much money to get sales tax revenue back. In the end, the store is likely to receive $375,000 sooner than anticipated and about $155,000 more than they would otherwise.
Ford Store President Tim Paulus lamented Malinoff’s departure and said selling more used cars, getting tax breaks and downsizing were a few of his restructuring moves.
“My heart goes out to (Malinoff). He’s a great guy,” Paulus said. “It could have occurred to us. We’ve just been fortunate that it did not.”
Morgan Hill City Manager Ed Tewes confirmed that the city has also been in talks with Courtesy Chevrolet at 17100 Laurel Road in Morgan Hill since the city’s recent tax break for Ford, but he declined to comment further. Malinoff was also negotiating to combine his dealerships with Courtesy, but GM never approved the local merger, Lopez said.
“We were working with GM and thought we could see the light at the end of the tunnel, but that didn’t happen, and meanwhile, we were just bleeding money,” Lopez said, adding that he would look for a similar job because “I’m too old to go back to the strawberry fields.”
Francisco Martinez, a technician at the Ford dealership for the past nine years, said he will return to his home in Watsonville and search for another service job there.
“I’m going to have to start looking,” Martinez said as he and other employees organized their wrenches and tools while Martinez’ 5-year-old son, Ivan, helped out with over-sized, oil-stained gloves.
“I knew we were slow, but not this slow,” Martinez said.
For those with GM cars looking for service, Gilroy Chevrolet Cadillac remains the city’s only GM dealer, and a block-lettered banner hanging from the building’s facade informed drivers-by that the dealership also services all GM makes and models.
Across the street, Malinoff’s former employees had already emptied the Pontiac lot of the 100 or so shiny sedans and hefty trucks worth about $3 million. GM will soon repossess those vehicles along with an additional $3 million worth of inventory at the Ford dealership, Lopez said.
Malinoff owns the property and the building where the Pontiac dealership stood, and the whole package is worth about $5.3 million, according to county tax records. Lopez said his boss, who has declined to comment, does not have plans to sell his limited-use lot unless the right offer comes around. Robert Scott Lynch owns the dirt underneath the shuttered Ford franchise, but Lopez said he was unsure what Lynch planned to do, and Lynch could not be reached for comment.
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Car dealers in Gilroy. The red pins are closed. The green ones are open.
