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BofA closes auto dealerships
By JEFF HARRINGTON © St. Petersburg Times, published March 22, 2001 Bank of America Corp.'s brash experiment in selling off-lease vehicles directly to consumers has fizzled. The bank is closing its last three Price Auto Outlet dealerships in the country, including one near Orlando International Airport. Floyd Robinson, president of Bank of America's auto group in Jacksonville, said the company announced internally a week ago that it had received no offers in trying to sell the dealerships as a going concern. It intends to deliver all current inventory by March 27 and shut the outlets in Orlando, Linden, N.J., and Anaheim, Calif., by April 12. The bank launched the enterprise last year based on a simple premise: As the country's largest bank, it owned thousands of cars coming off short-term leases every month. The bank reasoned it would make more money per vehicle by selling them directly to consumers, bypassing the traditional method of selling them at auction or wholesale to dealers. But the outlets seemed doomed from the outset. The bank tiptoed into the business, sensitive that it was competing against the same auto dealership base it relies on as customers. At the Price Auto Outlet in Orlando, which opened in April, manager Robert Kelly said he wasn't given much of a marketing budget nor was he allowed to hype the connection with Bank of America for fear of alienating other dealers. Moreover, Bank of America's timing was off. Resale prices for used cars have fallen the past couple of years because of a glut of older vehicles in the market. Car leases have waned in popularity nationally with the ratio of car purchase loans to car leases shifting from 60-40 to 80-20. Robinson said the fatal blow came from dealers themselves late last year. "Consistently across the country, we were getting feedback (from dealers) that they thought we were in competition with them and that it troubled them." Robinson would not discuss the economics behind the decision, declining to say how much the dealerships made or lost. Either way, he said, any potential upside was not enough to jeopardize the dealer relationship. The Price Auto Outlets combined were selling about 300 cars a month, or roughly 3 percent of the 10,000 vehicles the megabank has coming off lease each month. "You can see it was pretty insignificant," bank spokesman George Owen said. The bank had been scaling back the business since the second half of 2000. Robinson said the shutdown doesn't affect the bank's auto-leasing operation. - Jeff Harrington can be reached at harrington@sptimes.com/a> or (813) 226-3407.
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From the Times Business report
From the AP
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