Car Dealership's Closing Hurts Eldon, Mo.

Posted by: Phil Mintz on June 23

The Midwest’s farms and factories are being hit hard by the recession. BusinessWeek recently asked students in the business journalism program at the University of Missouri School of Journalism to see how communities in the region have been affected by the downturn. Here is one of their reports.

By Amanda Kushner and Sarah Koci

For residents of Eldon, Mo., a town of just under 5,000 in central Missouri, the closing of the Lloyd Belt car dealerships has been a severe blow. A town that once had three car dealerships, two owned by Lloyd Belt, is now devoid of the business the dealerships drew. It’s also meant a loss of tax revenues and other support the business gave to the community.

Belt closed his dealership on Friday, Mar. 13; many dealerships had been expected to close this year even before General Motors and Chrysler announced thousands of dealership cuts as part of their government-mandated restructuring. It was "an unlucky day," said Gary Marriott, Eldon's city administrator. The city's third car dealer, which sold Fords, had closed a few months earlier.

Marriott said he used the Belt dealerships to measure the town's prosperity. "I gauge the economy in the area with Lloyd Belt's Chevrolet, Chrysler, and GMC because he had lots and lots of automobiles and cars and customers," he said. "When we got the news, it was definitely a shock, and we wondered how we were going to replace those things."

The Belt dealerships were, in their heyday, the place where residents of the region came for GM vehicles. Belt owned one Jeep and Dodge dealership and another Chevrolet, Buick, Pontiac, and GMC dealership, according to Marriott and other town residents. In late 2008, Belt consolidated his dealerships, with the hope that business would improve. The Jeep and Dodge dealership moved three blocks down the road and Belt sold all vehicles from his sole location.

The drying up of credit, however, took its toll. GMAC Financial Services, a lender for 75% of General Motors auto dealers, could no longer offer the financing necessary for Belt's dealership to remain open, said Richard Gray, a former sales consultant at the dealership. "GMAC forced his hand," Gray said. "It had one or two options and the other option was going to cost him quite a bit of money—money he didn't have to put into it."

Belt declined to comment for this report, but in March he told a local television station that he was unable to find alternative financing after GMAC pulled his credit.

When Belt's dealerships closed, about 70 employees lost their jobs. But the loss to Eldon was more than just employment. Kim Mueller, a former receptionist at the Chrysler dealership, said the company supported its customers, acting as an extension of the community.

"We almost daily got asked for donations and as far as helping the community, Lloyd helped tons," Mueller said. Belt supported local churches, funded Eldon's annual Fourth of July fireworks show, and sponsored Eldon soccer teams and Project Prom, a safe after-prom alternative.

Now residents do not have a local place to service their cars. When residents purchased a car from the dealership, Gray said, they knew the money would go back to Eldon because Belt was always helping the town.

Eldon receives most of its city funding through sales tax, and the town does not have property taxes. The dealerships were a large source of income for Eldon. "When sales taxes are good, our economy in Eldon is good," Marriott said. "If there's not any sales tax, we are going to struggle."

Eldon is located in Miller County, where the unemployment rate for February 2009 was 13.1%. That was a 64% increase from a year earlier. At the time, the unemployment rate in Missouri was 8.3%, slightly higher than the national rate.

An economic development group has been created by the city and the Eldon Chamber of Commerce. The group, consisting of insurance providers, bankers, educators, and other residents, will meet monthly with the goal to save the town.

"We have a pretty broad spectrum of participants and the ideas are flowing," said Brandon Opie, former president of the Eldon Chamber of Commerce. "The city is willing to do almost anything to get a secure business here. We would love to see a big manufacturer walk in tomorrow. We know that is unrealistic, but we are hoping."