Holly Carlson posing with a photo of her grandfather (C... Holly Carlson posing with a photo of her grandfather (Carlson Automotive).
As the world seemed to be collapsing around it in 2009, Carlson Chrysler of Concord, N.H., drew on its traditions, got creative, and managed to come up with the right stuff to survive.

At first, everything was lined up against it. Financing dried up for dealers and car buyers alike, and the consumer market went into the long-running slump that it has only now begun to shake off. Then, in the spring of 2009, Chrysler filed for bankruptcy, and within weeks delivered the ultimate indignity: The cancellation of Carlson's franchise, robbing Carlson of its sole new car brand.

It was hard for Berger and Holly Carlson, the father-daughter team running the store, to fathom that this could happen to them. Their family's dealership had begun its existence as a Plymouth and DeSoto store more than 70 years earlier and had stayed a Chrysler dealership in good standing throughout that time, they say.

The Carlsons knew that the round of franchise cancellations would spell the death of many a dealer with just one manufacturer's brand or brands. At least some decent performers would certainly be among them. "There didn't seem to be a lot of rhyme or reason to who got to stay and who had to go," Holly Carlson recalled.

Just before the Chrysler letters went out, Berger Carlson had wondered aloud how his daughter could even contemplate the possibility that the automaker could cancel their franchise. Her reply: "Dad, it's a cold, harsh world. It's not like it used to be."

The day the fateful letter from Chrysler arrived, the elder Carlson gathered the staff of about two dozen together and vowed the dealership would press ahead, franchise or no franchise. "This is what it is, but don't you worry about it," he told the employees. "We are not going to lay anybody off."

They didn't -- and Berger Carlson's little talk "built up everybody's morale," his daughter remembers.

Hundreds of dealers with stand-alone brands likely told their staffs something similar as General Motors and Chrysler slashed their retail networks in the spring of 2009. But not all of them were able to deliver on the promise. Most dealerships in a similar situation were teetering on the brink in 2009, and even the slightest shudder in the weakened economy was likely to send them careening into oblivion.

Today the former Carlson Chrysler has found new life as Carlson Motors, an independent dealer focusing to a great extent on used car sales and a thriving shop operation handling various brands. Total vehicle sales are up over the last six months, compared to 2009, and the trend seems to be continuing, Holly Carlson said.

Every dealership that lost a GM or Chrysler franchise was hit by a triple whammy: They no longer had new-car revenue, warranty work or a steady flow of trade-ins, an important source of used cars.

On paper, Carlson ought to have been in worse shape than many of its counterparts. Its only brand was Chrysler, an underperformer of late. "Chrysler did not have an extremely varied line-up in and of itself," Holly Carlson notes.

Carlson Motors had lost Plymouth when Chrysler phased out the brand in 2001, and its efforts to incorporate a Dodge franchise had never found traction. DeSoto was a mere historical footnote by then, having been dropped way back in 1961. There was more bad news after its franchise was cancelled. In quick succession, several national banks cancelled Carlson's "floor plan" financing. These are the lines of credit that funded purchases for its inventory. The faxes from the banks arrived "within 15 minutes" of the dealership's receipt of its cancellation letter, Holly Carlson said. "Suddenly I had an understanding of the hardships that the independent dealers go through."

If the Carlsons had found some mysterious formula for surviving these problems in the meantime, they could make millions marketing it to dealers across the country. But the true reasons for its survival are straightforward, if difficult to duplicate.

The Carlson dealership (Carlson Automotive).

For one thing, some of the old Chrysler model lines still had their fans. Minivan customers were naturally still drawn to the Town and Country, and Carlson Motors had long been known as something of a minivan specialist in both sales and service. So the dealership focused on Chrysler and other minivans as it built up its used-car inventory.

The Internet was another positive factor. Carlson Motors no longer had to rely merely on a city of 42,000 people and its environs for customers. Internet sales of used cars tended to draw younger customers from further away than Chrysler models did, and its customer base expanded as a result. Holly Carlson fields Internet queries at the dealership herself.

The dealership also had a head start over some other dealers, she said. The owners and managers began to think about diversification when they saw "the economy going in the wrong direction," as early as 2007. "We really tried to expand our horizons ahead of time. That gave us a leg up on some of the other guys who just didn't know what to do as the bankruptcy hit."

At the same time, Carlson Motors broke the habit of primarily buying late-model Chrysler vehicles at closed auctions. "We started to dabble in other makes and models that could be successful for us," she said.

As early as two years before the Chrysler bankruptcy, it began to expand its capacity to service different vehicle makes and models by giving their technicians more training and hiring new ones familiar with other brands. It first spread the news about the broader service coverage by word of mouth. After the bankruptcy, Carlson Motors began advertising that the dealership did service on all makes and models. As the dealership already had a strong service department, this strengthened its hand in the used car business.

It didn't hurt that the shell-shocked consumers were staying away from new car showrooms in droves and the age of the average vehicle on the road kept rising. These factors gave an impetus to both used sales and service.

Like many franchised stores, the store had long avoided anything but top-tier used cars, knowing that a single lemon can savage a dealer's reputation in the community. It preferred to sell its less-promising trade-ins at auction. But once used vehicles became its bread and butter -- and with the market screaming for them -- management felt it had to start making exceptions. They began taking a closer look at decent cars that some good repair work could take up a notch or two. Carlson became confident it could increase the number of used vehicles it could add to its inventory and sell, without hurting its reputation in the community.

In the end, that reputation was everything. Even though its home base, Concord, is the capital of New Hampshire, it has a small-town feel. The people value tradition and have long memories, Holly Carlson said. Many had friends and family members who had dealt with the dealership over the years.

Her grandfather established the store in the late 1930s. Her father Berger, now an 89-year-old former surgeon, decided to take over the management after his retirement from medicine when he was in his early 70s. About 10 years ago, he persuaded Holly help him run the store after she had been working for an oil company for years. Berger Carlson remains involved in key decisions and stops by or calls almost daily.

Timothy Sink, the director of the Greater Concord Chamber of Commerce and a long-time customer of the dealership, says it has a loyal following. Members of his family have bought used cars from the store. Its service department has a reputation for good repair work.
"It's a place where you become comfortable doing business and you establish a level of trust," he said.

When the bankruptcy and cancellation hit, many people in the community -- some of whom had never been customers -- wanted to help the dealership with some extra business, Holly Carlson said, "even bringing in a Ford F150 for service on occasion."

New Hampshire Gov. John Lynch even stopped by to meet with employees and bolster their morale.

With the worst behind it, Carlson Motors has begun to look to the future. The dealership now has a better understanding of its new market realities, as well as its lower income and expense levels in a post-Chrysler era. Aside from continuing to build up the service department, "the used car department is really going to be my focus for the year going forward. We want to have more units and more confidence in the units we are stocking," Holly Carlson said.

Even after Carlson Motors' experience, the dealership would consider taking on a franchise with a major manufacturer, but perhaps not another deal with Chrysler right away. "I would have to wait on that one," Carlson said with a laugh.

Read more from our partner, Motor Trend: Chrysler's Future Cars: Can Fiat Save Them?


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