One-Two Punch : City Hit Hard Financially as Second Car Dealership Closes in Month

The recession took another whack at Downey as slumping sales forced the closure of a second major auto dealership this month.

Paramount Chevrolet shut its doors last week after doing business for more than 50 years on Firestone Boulevard. The closure left about 90 people without jobs and the city with about $200,000 less in annual sales-tax revenue to pay for municipal services.

“I heard a rumor that this recession is over but I haven’t seen any indication that it’s turned around yet,” Downey Mayor Barbara J. Hayden said.

The closure of Paramount Chevrolet on Tuesday, coupled with the closure of Downey Toyota Sept. 13, is projected to cost the city more than $500,000 a year in lost sales taxes. City Manager Gerald M. Caton said the City Council will decide whether to cut programs--and possibly lay off employees--during its budget review in January.

Because of the recession, the city has already been cutting expenses. For example, vacancies in 20 municipal jobs are not being filled.

But city officials are trying to remain optimistic. Toyota and General Motors officials say that they intend to find new owners to run dealerships in Downey.

“I don’t think we need to hit the panic button yet,” Hayden said. “But the closures of Paramount Chevrolet and Downey Toyota are significant.”

Paramount Chevrolet, which sold new and used cars and trucks, was the latest of at least 13 dealerships to close in the Southeast and Long Beach area in the past year. Three of those dealerships have reopened under new owners.

Rumors of Tuesday evening’s closure had been circulating for weeks, “but nobody wanted to face the rumor,” one employee said.

Car and truck sales were down about 50% compared to two years ago, according to Jerry Wackerman, secretary-treasurer of the dealership.

Paramount Chevrolet owner Richard Ferber said he began cutting spending last year and eventually reduced the staff to about 90. At one time, the dealership had about 175 employees.

“The reason I kept it open as long as I did was because I anticipated an upturn,” said Ferber, a Newport Beach businessman who grew up in Downey. “Things got progressively worse.”

Paramount Chevrolet employees said sales had hit bottom by the time the dealership went out of business last week.

“We were selling no cars. The whole thing has been getting ridiculous,” said salesman Mike Walter, 47, of Downey. “On a weekend we’d only sell one or two cars.”

Ferber “voluntarily terminated” his franchise last Wednesday, said Chevrolet Motor Division spokeswoman Suzanne Kane. Chevrolet was scheduled to pick up about 200 new cars and trucks from the dealership, she said.

Ferber said he would keep his used-car lot open until about 75 used cars and trucks are sold. Ferber said he would pay off his creditors and would not file for bankruptcy.

Chevrolet has several potential new owners for a Downey dealership, Kane said.

“I can’t tell you how soon, but we are definitely looking to have representation in the Downey area,” she said.

Walter, the salesman, was at Paramount Chevrolet with dozens of other employees Wednesday waiting to get his final paycheck and contemplating a job search. He said he had some prospects but nothing certain. The recession hit home.

“If George Bush says the recession is over, let him try to get a job in Southern California,” said Walter, who had worked at Paramount Chevrolet for five years.

Pablo Gonzalez, a transmission mechanic who worked at Paramount Chevrolet for 10 years, said he fears he will have to take a pay cut at any new job, which would probably end up costing him his three-bedroom Whittier home.

“I’ll put my house on the market and see what happens,” said Gonzalez, 33, a father of four. “So many years down the tubes.”

But Gonzalez was not bitter toward the dealership. He credited Paramount Chevrolet with training him to repair transmissions.

Downey officials said the closure of Paramount Chevrolet ends a chapter of Downey business history and civic goodwill.

Richard Ferber’s late father, O.E. Ferber, founded the dealership in 1939. Ferber made his home in Downey, where his widow, Esther, still lives. Richard and the other three Ferber children graduated from either Downey or Warren high schools.

Over the years, the dealership made it a habit to lend cars to the local high schools for homecoming parades and other activities, officials said. The dealership also could be counted on to buy ads in school fund-raising programs.

“I’m concerned about the loss of sales-tax revenue, but I’m also concerned that we’ve lost that kind of a business,” Mayor Hayden said. “My family has bought cars from them over the years. I guess I expected Paramount Chevrolet would always be there.”