Bill Heard loses GMAC credit, faces new allegations in Ga.


April Wortham
Automotive News
September 1, 2008 - 12:01 am ET


Bill Heard has taken a one-two hit from his largest creditor and a Georgia watchdog agency. The legal and financial troubles threaten "Mr. Big Volume," a title he claims as the world's top-selling Chevrolet dealer.

-- On Aug. 21, GMAC Financial Services discontinued its floorplanning line of credit to Bill Heard Enterprises Inc. over what a Heard spokesman called a "financial matter." GMAC finances new-vehicle inventory at some of Heard's 14 dealerships in seven states.

-- One day later, the Georgia Governor's Office of Consumer Affairs filed an amended counterclaim to a lawsuit pending in an Atlanta court. The counterclaim accuses Bill Heard Enterprises and its dealerships of continuing their "long-standing pattern of attempting to deceive Georgia consumers in violation of the Fair Business Practices Act."

All 14 Bill Heard Enterprises stores sell General Motors vehicles, but some rely on independent lenders for floorplanning. The GMAC action covers all the stores the lender finances. Neither GMAC nor Bill Heard Enterprises would say how many stores are affected.

GMAC declined to comment on Heard specifically. "We do regular reviews of credit risks related to the wholesale financing of our business, and we take appropriate measure to mitigate risk," said spokesman Mike Stoller. "That has been happening and will continue to happen on a regular basis."


The Georgia Governor's Office of Consumer Affairs says Bill Heard Enterprises has continued to attempt to deceive consumers since the company and state agency went to court in May 2007. Here are some of the new allegations, filed Aug. 22.
• Heard's Town Center dealership in Kennesaw, Ga., lied to third-party lenders about customers' incomes to increase the likelihood that the vehicles would be financed.
• Bill Heard's flagship Chevrolet store in Columbus, Ga., forged consumers' signatures on agreements without their knowledge or permission.
• Town Center inflated the loaned value of vehicles by telling third-party lenders the vehicles carried extra features and options that they did not -- an illegal practice known as "power booking."
• In September 2007, Heard subsidiary Tom Jumper Chevrolet sent a direct mail advertisement informing recipients they might receive financing at interest rates as low as 3.9 percent. The ad went only to people with low credit scores who were unlikely to qualify for such terms.

Power booking

Among more than a dozen fresh allegations made by the state agency: Bill Heard's Town Center dealership in Kennesaw, Ga., misrepresented to third-party lenders that options and extra features were added to vehicles that the dealership was trying to get financed for customers. The illegal practice is known as "power booking."

In power booking, a dealer artificially inflates the loaned value of a vehicle by telling the lender that there are features or options on the vehicle that don't exist. The bank then approves the loan for more than the vehicle is worth, with the difference going to the dealer.

According to court documents, Bill Heard Enterprises instructed its dealers to tell customers to lie if lenders called to verify the extra features.

The amended complaint quotes a former Bill Heard salesperson as saying: "You have to prep the buyer that when the bank calls, you know, whatever the bank asks you, you tell them, 'Yes, it's got that equipment. If it's got a hot tub in it, you got to tell them it's got a hot tub in it."

With group revenues of $2.13 billion in 2007, Bill Heard Enterprises, of Columbus, Ga., ranks No. 13 on Automotive News' list of the top 125 U.S. dealership groups based on new retail units sold.

Heard, who turns 74 on Sept. 8, told the Columbus Ledger-Enquirer in a rare interview in July that he planned to sell "two or three" of his dealerships because of slow sales. Last week, the newspaper reported that Bill Heard Enterprises has trimmed 400 employees out of 2,800 across the country.

In a written statement to Automotive News and other media last week, Bill Heard Enterprises blamed its financial condition on a combination of "adverse economic conditions, high gasoline prices and our traditional product mix" weighted toward trucks.

"We have been successful in this business for four decades, and we have navigated successfully through challenging economic conditions before," the statement said.

"Our plan is to increase our efficiency and productivity, tap the emerging fuel-conscious market with an appropriate product mix, reduce our already-competitive cost structure and restructure our business to compete effectively in current market conditions."

The company also must reply to the state of Georgia's allegations.

The state's latest complaint is an amendment to a July 2007 counterclaim to a lawsuit Bill Heard Enterprises filed in May 2007 under the Georgia Open Records Act. That lawsuit sought the names of individuals and dealerships that filed complaints against Bill Heard over a 2006 fake recall notice.

In October 2006, Bill Heard mailed fliers to about 10,000 Georgia residents labeled "urgent potential recall notification." The flier carried the logos of GM and its brands and urged recipients to call a toll-free number to schedule a free vehicle safety inspection.

Fake recall

There was no recall. GM sent Heard a letter saying he had breached GM's sales and service agreement and gave the dealership 30 days to correct or explain the breaches.

In the latest court filing, the Office of Consumer Affairs says Bill Heard Enterprises continued to disseminate "deceptive and misleading advertisements" even after the office took the matter to court.

Bill Heard Enterprises denies all the allegations. In its media statement, the company said it "will continue to work constructively with the Office of Consumer Affairs. We have consistently stated that we have policies and procedures in place that require and enable legal, ethical and fair business practices including advertising and finance."

Says William Cloud, a spokesman for the Office of Consumer Affairs: "At best, that response is eyewash."

He says the office has been close to an agreement with Bill Heard Enterprises twice in the past year. The dealership's representatives broke off the latest round of negotiations Aug. 21 — the same day GMAC yanked its credit.

"They have been the ones that have walked away from it — twice," Cloud says. "And we assume the directions were from the top."

 

DISHONEST salespeople? Come on now........COULDN'T be.

 

Bill Heard has a Chevrolet franchise in Houston - and it has been accused of all kinds of fraudulent acts by local consumer reporters. Most tend to pretty egregious "bait and switch" schemes that advertise a new Suburban for $21,000 - but if you go to the dealership to check it out, you'll find that it was "sold". You are then offered a normally-optioned Suburban for $32,000. They are also famous for "addendum stickers", that rustproofing and Scotchgard they apply to every vehicle on the lot - that will up the price a non-negotiable $2000.

They weren't always that way. Several years ago when they opened their Sugar Land franchise, I bought a company car from them - a '77 white Caprice Classic wagon with a tan vinyl interior and minus the third row seat. Sticker was $17K and I bought it with a company check for $15K. The funny thing was that I had called most of the Chevy dealers in town, and none had one on the lot that fit our company specs. Only Bill Heard offered to get me the car I wanted within 24 hours, and they came through. The car actually came from a dealer's lot about 2 miles up the freeway from theirs. I'd called that dealer first, and they obviously didn't even bother to look at their inventory sheet. We drove that wagon for several years and both it and the dealership gave excellent service. I wonder what happened?

 

The sad thing is that there are several other dealerships out there that do this everyday.

 

whoa another Bill Heard shady scandal, didnt see that coming

 

In today's auto market that is so adverse to big SUV's (even in traditionally truck/Suburban-friendly TX), this might not be a scam. You just MIGHT be able to get a new one for 21K...especially if it is a demo.

 

Hardly. In this case, the abuses in question have taken place over the past ten years.

 

"Hardly" as in what?........That you think the 21K Suburban offer is a scam? Perhaps I can't comment on that particular offer, but, because of gas prices, even though they have come down a little, I know that there are a lot of Chevy dealerships that can't GIVE Suburbans away. Of course, TX is..........and has always been............very truck-friendly. GA? Not quite as much.

 

Texas has always accounted for a major portion of Suburban sales. They don't call it the "Cowboy Cadillac" for nothing. Most, if not all are heavily optioned at nearly $50K, some $7K under "sticker". While many are the K-2500 4WD, 3/4-ton versions, lesser vehicles are common at $32K. Even in the current market, it would be difficult to find a legitimate deal on a RWD C-1500 Suburban for less than $24K. Most Suburban drivers down here have a serious need (want) for a large vehicle, whatever the fuel cost. The rest are driving Kias.

As far back as 1998 Bill Heard Chevrolet has offered $18K Suburbans - occasionally dipping below that figure for a C-1500, in white, no options. Very few, if any people would be interested in such a vehicle, which I assume is ordered specifically for the purpose of running as a price leader. Supposedly the truck doesn't even include hubcaps, according to local media outlets that have been shown the vehicle in question. It looks like a city or state construction vehicle, at best - you know, the kind with vinyl seats and a rubber floormat - the kind you hose out at the end of the day. Maybe that's the market for which Chevrolet builds these strippers.

The ads usually appear in the local paper on Thursday or Saturday, advertising this "bargain" truck, but if you go to the dealership early to get your hands on one, it's been "sold". One enterprising customer parked on the street in front of the dealership at 4am just to be first in line for one of these vehicles. He was approached by the "Security Guard" and roughed up when he explained his presence.

But that's not the extent of the problems at BHC. Following the above incident and its legal fallout last fall, a local consumer reporter got involved. What she discovered wasn't pretty:

http://www.click2houston.com/investi...31/detail.html

 

There's a huge Bill Heard Chevy dealer in the Memphis suburbs... I've been there a few times before and almost always leaving there thinking I'll never come back. I've heard lots of seriously bad horror stories about them from others, too... I'd sure never buy from them.

 

If I was Bill Heard I would have sold all my GM dealerships and purchased Toyota dealerships. I do feel bad for the employees that will be laid off but then again they can go work for Toyota...

09/30/2008 05:19:12 PM EDT -- Columbus Ledger-Enquirer (GA)

Heard lists debt of $260 million in bankruptcy filing


Sep. 29--Columbus-based Bill Heard Enterprises filed for federal bankruptcy protection late Sunday, listing more than $260 million in debt.

The filing was in the United States Bankruptcy Court for the Northern District of Alabama. The company has filed for Chapter 11 protection for the purpose of liquidating its assets. The first court hearing is at 1:30 p.m. CDT in Decatur, Ala.

Bill Heard Enterprises, one of the largest Chevrolet dealers in the nation, closed its 14 stores this month. After closing the Scottsdale, Ariz., store two weeks ago, Heard Enterprises closed the remaining 13 locations Wednesday.

The move put 2,700 people out of work, including more than 300 at the flagship Columbus dealership.

Heard Enterprises issued a statement that it had filed for bankruptcy protection. "The company will reserve further comment at this time," the statement read.

The bankruptcy filing shows that Bill Heard Jr. owns 95.7 percent of the privately held company, which was the country's 11th largest automobile dealership group and the nation's largest Chevrolet dealer. Heard's sons, Bill Heard III and Edward Heard, each own a 1.3 percent share of the company. The Columbus State University Foundation Inc., owns a 1.8-percent stake in Bill Heard Enterprises.

Heard Jr. gave the CSU foundation about 175,000 shares of stock worth between $2 million and $3 million about four years ago when the university was conducting a $100 million capital campaign. The foundation was holding the stock with the plan of Heard repurchasing it, said Kayron Laska, CSU vice president for University Advancement. It is unclear what the value of the stock is now.

"That is not an uncommon thing," Laska said.

There are 35 different subsidiaries that fall under Bill Heard Enterprises. Though they filed for bankruptcy protection individually, Bill Heard Enterprises is asking the federal court to handle the cases jointly rather than individually.

Heard Enterprises financial problems were compounded last month when GMAC stopped providing financing for inventory at some of the Heard dealerships. The bankruptcy filing shows that three different companies -- GMAC, BMW Financial Services and JP Morgan Chase Bank -- were providing financing for inventory. GMAC was providing financing for 10 Heard dealerships, including Columbus.

Bill Heard Enterprises owes those companies approximately $229 million, the filing states. The company also lists approximately $40 million in unsecured debt. In addition to that there are unpaid wages, employee medical claims and various state taxes.

The majority of the dealerships are on property owned by one or more Heard subsidiaries. The property is mortgaged to GE Commercial Finance Business Property Corp, Astar Finance Falcon II, Columbus Bank & Trust Co., GMAC or JP Morgan Chase.

Alison Dowe, a spokesperson for CB&T's parent company Synovus, said, "We cannot and will not respond to questions about our customers."

Heard Enterprises still owns the rights to sell Chevrolets and other General Motors products in the markets where he had stores. The company has been negotiating to sell those dealerships, including the Columbus one.

For more on this story, please return to ledger-enquirer.com throughout the day.


To see more of the Columbus Ledger-Enquirer, or to subscribe to the newspaper, go to http://www.ledger-enquirer.com. Copyright (c) 2008, Columbus Ledger-Enquirer, Ga. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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All information provided is subject to terms of use.

 

10/02/2008 04:07:57 PM EDT -- San Jose Mercury News (CA)

Silicon Valley car dealers shut doors: OWNERS TRY TO SELL DEALERSHIPS,THEN GIVE UP AND WALK AWAY


Oct. 2--At his dealership in Los Gatos, John Moore sits, both literally and figuratively, in the middle of a depressing time for Silicon Valley car dealers.

Moore Buick-Pontiac-GMC is a three-generation, family-owned dealership on Los Gatos Boulevard. To the store's right are the remains of Swanson Ford, which closed in 2006 and was destroyed in a fire on Sunday. To the showroom's left is Los Gatos Chevrolet, which locked its doors for good on Tuesday.

"Two years ago, I was saying I never saw business conditions like this," Moore said. "Unfortunately, car dealers are the most optimistic entrepreneurs in the world. We keep hoping it's going to get better, but it keeps getting worse."

Perhaps a dozen San Jose-area dealerships have closed in the past few years, including Silicon Valley Hummer, Stevens Creek Buick-Pontiac-GMC, Sunnyvale Dodge-Chrysler-Jeep and Sunnyvale Lincoln-Mercury this year. Smythe Volvo closed one location on Capitol Expressway Auto Mall, but another Volvo store remains open on Stevens Creek Boulevard.

"These stores are closing, not selling. That's what's amazing," said Shaun Del Grande, a longtime Valley dealer with Mazda, Suzuki, Hyundai and Volkswagen franchises. "There's not even a market out there."

Nationwide, the U.S. auto industry faces a nearly unprecedented combination of negative economic factors. New car and truck sales are at their lowest point in 15 years. Car buyers, already worried about

market turbulence and bank failures, can't get credit, even if they wanted to buy a new vehicle. Dealers have credit issues, too, because they must take out loans to pay for the inventory of cars and trucks on their lots.

It was all too much for Los Gatos Chevrolet.

"The industry is just really bad right now," said Chris Spencer, the store's general manager and son of owner Dave Spencer. "It's impossible to operate a successful dealership."

The family -- Dave's sister Kelly is the dealership's controller -- bought the showroom in 2005. Over the past 12 months, the number of car buyers, shoppers and even owners needing car service has steadily declined, Spencer said.

A deal with an out-of-state buyer fell through recently, and the store was shuttered Tuesday. Courtesy Chevrolet of San Jose bought some of the new cars; General Motors took back the rest. Pink signs taped to the windows tell the tale: Los Gatos Chevrolet is closed.

"The saddest thing about this is that 35 people don't have jobs," Spencer said.

An industry observer described the current market as "a very tough time for dealerships. It's the toughest time in the last 10 to 15 years in terms of sales volumes and profitability," said Jesse Toprak, executive director of industry analysis at the Edmunds.com car-information Web site. "The weakest will be eliminated."

Automakers will sell about 14 million new vehicles this year, the worst year since 1993. They had sold at least 16 million cars annually in this decade.

Before the end of 2008 or early in 2009, the tally of new-car dealerships in the United States will fall below 20,000 for the first time since World War II, said Paul Taylor, chief economist for the National Automobile Dealers Association.

Perhaps 600 dealerships will close this year nationally, he said, compared with 400 in 2007. So far, about 70 have closed in California.

Toprak blames a lack of consumer confidence. "There's a lot of postponement of purchase decisions by consumers -- even consumers who have the need and the ability to purchase. They just don't want to commit with the economy so mixed up," he said.

In the first six months of 2008, car sales in Santa Clara County were down 18.6 percent.

That not only hurts car dealers, but the city of San Jose, where tax revenue from new-car sales is down $800,000 through the end of June. Overall though, said Steven Brewster, a city economic development officer, the city's tax revenue is down just 1 percent as higher gas prices have generated more tax dollars.

The national dealers association said there were 20,770 new-car dealerships in the U.S. in 2007. They employed 1.1 million people, and contributed $693 billion to the U.S. economy. There were 26,350 showrooms in 1981. California's 1,594 new-car dealerships had about 134,000 workers, and those stores contributed $82 billion to the local, state and national economy in 2007, the group said.

Peter Welch, president of the California New Cars Dealers Association, blames the housing/mortgage implosion, rising gas prices and the credit crunch for the problems in the auto industry.

He said domestic carmakers are being hit hardest because they have more dealerships, and they're strapped with the least fuel-efficient vehicles, such as trucks and SUVs.

Welch recently talked to a California Chevrolet dealer who told him he had just 30 percent of the inventory that he had a year ago on his lot, but that 60 percent of those cars were the same ones he had a year ago.

If you're not feeling secure about your job, or about meeting your mortgage or rent payments, or about paying for your children's tuition, "you're not going to add a new $400 car payment, especially if your car works now," Welch said.

John Moore's father bought the land under his dealership, one reason the store can still operate. Dealers who lease their land will continue to struggle to meet rent payments for the next few years, he said, and more will have to close.

Buyers will face problems, too. "The days of having average credit and a little down-payment are over," Moore said. "You've got to have exceptional credit or a big down-payment."

Contact Matt Nauman at (408) 920-5701 or mnauman@mercurynews.com.


To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com. Copyright (c) 2008, San Jose Mercury News, Calif. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

Copyright © 2008 Acquire Media. All rights reserved.
All information provided is subject to terms of use.

 

I had a good friend who worked as Internet Manager at the Town Center location. It would take PAGES to list all the deceptive practices that occured there. He would try as best as possible to educate customers on the "bad" part of the deals, but "if you don't close sales, you don't get paid" and he was in a tough position. On several, he would NOT do the deal, and it went to another salesperson. It hit him in the check book, but he could sleep at night.

I once went in to test drive a Vette that "was only $31K OTD" according to a rep who was standing next to me, when the sticker was $43K. My friend told me the rep eventually sold it with "extras" for $49K!!!! Explain that one....

 

I was getting my hair cut and a couple people were talking about the Bill Heard dealership that closed here and said they were really shady and talked about all the horror stories they heard about and encountered from that dealership and said they were not surprised about the allegations and them going under.

 

nice conversation it was.... keep on posting.....

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