San Jose auto dealership closes abruptly

December 30, 2008 7:02:33 PM PST
Even as the Federal Government is promising yet more help for the auto industry, the casualties are piling up. Another $6 billion in aid -- on top of the $17 billion plan already approved -- can't stop the latest dealership closure in San Jose. At the Capitol Expressway Auto Mall, employees and customers were shocked by the sudden closure.

As late as this Monday, employees at San Jose's Capitol Buick Pontiac GMC were telling people to bring in their cars on Tuesday for service, but when customers arrived the dealership was closed.

Michael Kestel has been an auto mechanic for 18 years. He's worked the last six at Capital Buick Pontiac GMC in San Jose. He has a daughter in college, a mortgage, and as of Tuesday, no job.

"My wife's working so I'm not going to lose my house this month or next, but I have to find another job to sustain my family," said Kestel.

When ABC7's Karina Rusk tried to talk with dealership owner Ken Okenquist about the abrupt closure and just how many people lost their jobs, he asked a San Jose Police Officer to escort her and her photographer off the property.

Customer after customer with service appointments were also turned away.

"There's worry for me because I pay a lot of money for this [truck]," said a customer.

"It's scary, definitely scary. It surprised me because I definitely didn't have any idea they were having that many problems," said Jerry Irving, a customer.

This dealership is of course not alone. There are 1600 dealerships in California. This year 120 have closed statewide, eight in Silicon Valley. Many expect that number to climb and it appears to be exactly what the big three automakers want.

GM presented a plan to Congress as part of its request for a bail-out, setting a goal of closing 1,750 underperforming showrooms over four years -- which is more than one fourth of its locations. Chrysler hasn't released targets yet to trim its 3,300 dealerships. Right now the economy is exerting the most pressure. Stan is a long time auto accessory vender.

"I've been calling on the new car dealers since 1984. The dealers you see dropping right now is the tip of the iceberg. I know all the owners. They're just making plans to shut down," said Stan.

The average auto dealer in Silicon Valley employs 85 people and pumps $1 million of sales tax revenue into the city. Michael Kestel says the inevitable consolidation tsunami is just beginning.

"It's just going to be a painful time. A lot of things are going to be smaller than they were in years and I just think that's the way it's going to be. Everybody has to adjust and unfortunately it's not going to be easy for anybody," said Kestel.

Rusk said she was disappointed she couldn't speak with Mr. Okenquist, but does understand this is a very difficult time. Okenquist does have two other dealerships in the Bay Area. One is in Dublin and the other is in Newark. Employees at both of those locations said they are open and assured Rusk that there are no known plans for closure.


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