By Boris Ladwig, The Republic
bladwig@therepublic.com
Dave Burt plans to sell or close his Hyundai dealership because he no longer can obtain a loan.
Burt said although banks have received money from the federal $700 billion bailout, they are reluctant to issue loans to some businesses, particularly those related to the struggling automotive industry.
"The banks are sitting on the money," he said. "The money has simply dried up."
B u r t said he is talking to a couple of potential buyers and expects a deal by the end of the week. Otherwise he will file for "voluntary termination," which means he would sell the vehicles and parts back to the manufacturer.
Burt owns the building and property at 3020 N. National Road, where he built the dealership about a year ago. It employs 10, including sales staff and service technicians.
"I'm not planning to file bankruptcy," he said.
Due to the possible transaction, the Hyundai dealership is not selling cars, Burt said.
However, Hyundai vehicles still are being serviced, including warranty work, at the Bob Poynter Chrysler Dodge Jeep dealership next door.
Burt recently sold that dealership to Poynter, who also owns a Ford dealership in Seymour. Burt still owns the property and building and has continued servicing Hyundais at the Poynter dealership.
Deep recession
Burt, who has been in business 28 years, said he has never seen economic conditions as poor as today.
"Not even close," he said.
"I think our economy is in line for a pretty sharp recession."
He expected it to recover, he said, but "it'll stay difficult for a while."
The federal government has failed to attach enough strings to the bailout money, Burt said, which means banks that receive the funds are not required to use it for lending - but can purchase other assets or simply sit on the money.
Burt said consumers still have access to car loans - though lenders have tightened their credit requirements.
However, Burt said some lenders are requiring much lower debt-to-capital ratios for some businesses.
Burt used to have no trouble obtaining a credit line of $10 million, or credit lines that were five times higher than his equity.
"That's changed in the past year," he said.
Now he cannot obtain a credit line of $1.5 million, about twice his equity.
"This is a problem for a lot of dealerships all across the country," Burt said.
That dynamic ultimately could severely hamper the economy, he said.
If dealers cannot obtain credit to keep their dealerships going, Burt said, a federal bailout of the big automakers will fail.