Bruce Coleman, his Ewing Chrylser and Jeep dealerships summarily snatched away, is fighting mad. Dick Greenfield, whose Lawrence dealership has been handed these spoils, is worried about the ultimate price he will pay. Brandon Baker is quite sure that his Route 206 Chrysler dealership is well-positioned for the new realities of the car business.

Sheldon Sandler, owner of the only financial services firm in the country whose sole focus is car dealerships, is watching the drama unfold and wondering what lies ahead for the car industry. Sandler, whose Skillman-based company, Bel Air Partners, was deeply involved in creating big public dealership networks, is outraged over Chrysler’s plan to reach profitability by abruptly dropping hundreds of its dealers. When the subject comes up, the generally easy-going Sandler swings around in his deep desk chair, from which he had been checking his E-mail, and declares: “It’s draconian! It’s counterintuitive. It’s dead wrong!”

And, he adds, echoing Coleman’s frequent references to creeping socialism, “they want to do it with taxpayer money. There’s no transparency. Somebody’s making decisions over who should live and who should die, and they’re doing it with my tax money.”

“They’re taking people who are running profitable business and saying ‘you’re out of business,’” adds Todd Berko, a Columbia MBA and former publisher who is one of Sandler’s partners. He points out that deciding to go with fewer locations “is opposite to Home Depot, McDonald’s, Starbucks” and he doubts that “you can cut your way to profitability.”

“They want fewer sales, stronger dealers,” says Sandler, “but they forgot a few things. This is the first time we’ve heard that sacrificing volume is the way to build a business. We think there was a loyalty to local dealers. Once you cut a consumer loose, his affection is up in the air. He may wind up with Honda or Toyota.”

Sandler’s company is 11 years old and was formed because he was in the right place at the right time, had an “ah ha” moment, was smart enough to recognize it, and brave enough to act on it. The venture was a detour from the safe career path his entrepreneurial family in Easton, Pennsylvania, wanted for him. “My dad was a paperhanger,” he says. “He didn’t have a very good business. He wanted me to work for the government.”

Sandler dutifully studied accounting at Penn State, graduating in 1966, and promptly went to work for the SEC. After 10 years, he found his way to Wall Street, ending up at Ladenburg Thalmann, a small investment bank “that did the work the big guys didn’t want to do.” One of those deals involved a Texas truck dealer, Rush Enterprises, that wanted to go public. Sandler was the architect of the 1996 IPO, the very first for an automotive dealership. “I got a lot of publicity for that,” he says. He also got the idea for a business of his own. “I didn’t think the big guys would be interested in taking car dealerships public,” he says. So he opened a boutique firm to specialize in just that niche.

It turns out that he was wrong about the big guys, he says with a laugh. Before long the likes of Morgan Stanley were involved in what became a frenzy of public offerings. But Bel Air was able to compete, and has been involved in the sale or purchase of more than 135 franchises with sales of over $4.5 billion and transaction values in the $10 to $100 million range.

The company has worked on dealership acquisitions all over the country, but Sandler says that it has a big business in the Northeast in general, and in New Jersey in particular. He is not sure what part his company’s physical presence has played in getting these deals, but he says that he has found Skillman an uncommonly good area from which to do business. It’s close to his Hopewell home, he likes the depth of the talent pool here, and finds the easy commute to New York City a big plus. But he waxes most enthusiastic about Trenton Airport. “Our clients love to fly in there,” he says of the small airport.

Among his New Jersey deals, Sandler represented Steve Kalafer and his partner, Byron Brisby, when they bought back their dealerships from AutoNation. (Kalafer, who had worked for AutoNation after selling his dealerships to that company, decided he would rather be his own boss, Sandler explains.) He represented the Sussman dealerships in Atlantic City and the David Michael dealership in Freehold when they sold to public companies. He also advised the Turnersville Auto Group in its sale to the Penske Group. A particularly challenging local sale, Sandler recalls, involved the Dayton Auto Center, which went to a number of different buyers. The firm’s most recent big deal involved the sale of Princeton BMW to the Asbury Automotive Group, one of the largest publicly traded dealership companies in the country.

Sandler has done a fair amount of jumping around in his work life, going from government worker to Wall Street banker to entrepreneur in a brand new niche. Coleman, on the other hand, has only had — and only wanted — one job. Throughout the 1960s, while he was still too young to drive, he took the bus to his family’s car dealership on Spruce Street in Ewing, where his father worked with his two uncles. “I started out washing cars,” he recalls. Some 10 years later, his father, the late Lew Coleman, had bought a dealership around the corner on Olden Avenue, and Bruce Coleman’s after-school job became his life. Along with his brother, Gary, another life-long car dealer, he now owns a Jeep/Subaru/Kia dealership on Olden Avenue in Ewing and a Chrysler/Jeep dealership in Hightstown.

Recently he has been glued to CSPAN, watching Jim Press, Chrysler’s president, try to explain to a Senate committee headed by Jay Rockefeller just why the company needs to cut 769 of its dealers, including him.

Rockefeller, chairman of the Senate committee on commerce, science and transportation, had summoned Press and GM president Fritz Henderson in a letter, dated May 21, in which he wrote: “While I am pleased to see that Chrysler is finally being responsive to the hundreds of local dealerships throughout America waiting for answers about their livelihood — many questions remain unanswered…I believe it is imperative for Chrysler and General Motors to immediately address the insufficient transition period, help dealerships recoup full inventory costs, minimize job loss, and provide consumers with access to quality service.”

Riveted to the television coverage of the hearing, and gratified to hear his dealership mentioned, Coleman strongly agreed with Rockefeller’s assessment of how he and his fellow dealers were being treated. “I don’t believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real plan, no real notice and no real help,” Rockefeller told the automakers. “That is just plain wrong.”

Those dealers “are looking into a black hole right now,” while companies seem to be implying “that the dealers themselves are responsible for the companies’ problems,” Rockefeller said.

Coleman cheered the Senator on, agreeing with all of the points that he made. “We have done nothing wrong,” Coleman says. “We did everything Chrysler wanted. They had what they called ‘Project 2000.’ They wanted to put Jeep and Chrysler together. So in 1998 we did our good duty and bought Chrysler. We spent a lot of money. It took a couple of years to get the deal done. The Chrysler we bought out had been in business since 1931.”

Chrysler’s position is that it needs to cut dealers in order to survive. But Coleman says that the company has been adding dealers. “In the past 10 years, since I’ve had the Jeep dealership, Chrysler has added two more in Mercer County — Baker in Princeton and the Belle Mead Garage.”

As the Senate hearing wore on, Coleman’s hope for any kind of a reprieve dwindled to nothing. The company’s future was in the hands of a bankruptcy court and he saw that even the U.S. Senate would be unable to alter the course that the company was determined to follow. “But I had to fight,” Coleman says. “I wrote to President Obama. I spent $20,000 on a lawyer.”

Coleman’s Chrysler and Jeep franchises, for which he paid “in the seven figure,” are to be given to Dick Greenfield, another life-long dealer. Greenfield sells Dodges, the third Chrysler brand, on Route 1 in Lawrence. It initially appeared that being given the Chrysler and Jeep brands was going to be a clear win for him, but now he is not so sure. During the first week in June, any excitement at the prospect of getting the brands had been replaced by wariness. “They told me it was a done deal three weeks ago,” he says. “But now there are a lot of hoops to jump through. We’d want the brands, but now it’s a matter of price. We don’t know where we are. We were told one thing, but it’s been changed 50 times.”

Greenfield did not want to go into specifics, but Coleman says the rumor is that Chrysler wants Greenfield, and other dealers who are being given its brands, to build new showrooms, which he estimates could cost $2 million.

Sandler agrees that something like this is very probably Chrysler’s plan. “I think that Chrysler wants a modern showroom with all three brands, and it wants it next to a dealer selling a foreign brand.” Outselling domestic brands, the foreign car dealers are a big draw for consumers. Chrysler’s hope is that car shoppers, likely to be checking out Hondas, Toyotas, and Hyundais, will look at their cars, too, if they are on display close by.

Sandler points out that the Baker Chrysler/Jeep/Dodge dealership, just down the road from his Skillman office, is close to Honda, Volkswagen, and Acura dealerships, and has been spared.

Brandon Baker confirms that his dealership has made the cut. But his heart goes out to the Colemans. “I know how it feels. It happened to us with Buick and Pontiac,” he says. His dealership, founded by his father, Ed Baker, had sold those two GM brands, but as time went on, the tastes of their Princeton customers changed, and sales dropped. “GM wanted us out,” Baker recalls. The manufacturer bought back the brands, and the Baker dealership, which had also been selling Chryslers, added Jeeps in 1999. When Chrysler told them that they could also have a Dodge franchise at no cost, and could become one of its favored “Genesis” dealers if they built a new showroom, they complied.

It was expensive, but Baker says it was worth it. He also says that in addition to having all three Chrysler brands and being located near several foreign car dealerships, his business found favor with Chrysler because of its Princeton location.

Baker’s grandfather was a serial car dealer who owned 50 dealerships in the Princeton area over the years, including Tobin Chevrolet.

Now Brandon, a third generation car dealer, is looking forward to adding brands to his showroom. Chrysler’s sale to Fiat means that he will add those cars to his mix, starting with the Fiat 500, which Baker describes as a similar to the Mini Cooper. In the depths of the last run-up in gas prices — the one that sent prices over $4 a gallon — he added another brand, Vespa. But he second guessed himself when prices dropped back down to $1.50 a gallon. Now Baker, who enjoys riding the 80-mile-per-gallon Vespa to Nassau Street, is set to be one of the few people to rejoice as gas prices start to climb again.

All of this auto drama is happening around Sandler, who watches with keen interest. A self-professed “car nut,” he presides over a business that consults to dealers, sets valuations for their dealerships, hosts conferences for the nation’s top-grossing car dealers, and arranges for acquisitions when dealers want to sell.

Although he has nothing on the line, Sandler sounds as angry over Chrysler’s dealer cuts as Coleman is. But he does give the crippled auto giant at least a little bit of a pass. “We understand,” he says, “too many dealers, fewer customers. They can’t afford the best showrooms, the best people.” It does cost something to distribute cars to a huge network of dealers, he concedes.

“Take it to the extreme,” he says. “What if you manufacture 5,000 cars and have 5,000 dealers?” Surely getting the cars to all of the lots would cost a lot more than dropping off all 5,000 in one place. But he is disturbed that the numbers have not been made public. Chrysler is complaining that its large network costs the company too much money, but Sandler wonders if that is the case.

“It’s possible that they have a point,” says Sandler, “but the process (of cutting dealers) is patently unfair. They’re blaming the dealers for their problems. They’re using bankruptcy to make the decisions.”

Will the day come when Coleman, who retains a Subaru and a Kia dealership, be glad to be rid of the American brands? Will Greenfield be sorry that he was given Jeep and Chrysler? Who will be the ultimate winner? “Well, right now you can say that Coleman has lost,” says Sandler. “He’s off the field. Greenfield is still on the field, but has he won? We probably won’t know for three years.”

Sandler’s company takes its name from a car, a 1957 Chevrolet Bel Air. “I was going to go with ‘Hudson,’” says Sandler. “That was the first car I remember as a kid. But the name was taken. My cousin had a 1957 Bel Air. It was really cool. That was the second car I thought of.”

Right inside the front door of Bel Air’s offices there is a large display case full of scale model Bel Airs, their proud, sporty fins rendered in bold reds and cool blues. Each model car represents a deal that Bel Air has completed.

The car consolidation craze that began in 1996 was just part of a larger trend, says Berko. A George Washington University graduate (Class of 1974) who has been with Sandler since 2000, Berko came from a similar background. A South Orange native who paid for business school with the proceeds from a book he wrote on Social Security, he also grew up in a blue collar home with a father who was unhappy in his work. “My father sold carpeting,” says Berko. “He hated it. He wanted to be a writer.” Unlike Sandler’s father, the elder Berko did eventually find career satisfaction. He published a successful consumer magazine called “Caveat Emptor” and wrote a number of books that he sold via mail order, the same way that Berko sold his Social Security book.

While being a solo entrepreneur worked for Berko’s father, by the late-1990s it was not working too well for the owners of consumer businesses in any number of industries. Competition from huge companies that were using their size to create efficiencies of scale was driving small companies of all kinds to sell out to enormous category killer companies. It happened with drug stores, funeral parlors, courier services, hardware stores, ambulance companies, “almost all consumer businesses,” says Berko, who specialized in these consolidations before joining Sandler and concentrating on the auto industry.

The IPO, golden grail of the 1990s, formerly a sure-thing expressway to great wealth, was as attractive in the auto business as in any other. The biggest player was, and is, Wayne Huizenga, who also founded Waste Management and the Blockbuster chain of video stores. His AutoNation is “by far” the largest publicly traded auto company, says Sandler, who took another of his associates, managing partner Tom Butler, from that company.

Describing their first meeting, Butler says, “I wrote Sheldon his first check.” That was back in 1998 when Sandler was just getting started in business and Butler was busy amassing AutoNation’s dealership empire. Butler, a Bucknell graduate (Class of 1982) who holds an MBA from Wharton, was senior vice president, corporate development for AutoNation. “Sheldon and I kept in touch through the years,” he says. After nearly a decade in Florida with AutoNation, Butler joined Sandler’s firm. The move had the advantage of returning him to the Philadelphia area, where he grew up. A Fort Washington native, his father was chairman of First People’s Bank.

The auto IPO era is over for now, and the big public dealership networks have by and large stopped buying new dealerships as they work on the profitability of the dealerships they already own. That is one reason that Butler left AutoNation after spending a decade there directing the expansion of its network.

“You need 50, 60, going on 100 dealerships, to go public,” says Sandler. The deals have been done. It is unlikely that more combinations will be formed any time soon. Even the expansion of the five or six big public automobile companies has slowed to less than a trickle. The sale of Princeton BMW to Asbury Automotive was “the last big public deal,” he says.

Everything in the auto world is now in flux, and the Bel Air partners think that the car business is forever changed.

“We never thought that we would see less than ten million, nine-and-a-half million,” says Berko. He is standing in front of the case of 1957 Bel Airs that were unveiled with tremendous fanfare to an adoring, car-loving public, just trying out the new interstate highways and eager for the release of each year’s brand new, totally re-designed cars. The millions he is referring to are units, cars, the total number sold in the United States in a given year. “It’s the lowest since 1950,” he says. “Nobody thought it would go so low.”

For many years the number was pumped up by consumers eager to drive the latest model — the 1957 Bel Air or the 1969 Pontiac Judge. Japanese car manufacturers, with their concentration on sound mechanics, rather than style, put an end to that, says Berko. Their redesigns were less frequent than those of their American counterparts, and less dramatic.

Foreign car makers, German as well as Japanese, took more and more business as consumers came to see their cars as more reliable — and often more fuel efficient. American manufacturers, with their big portfolio of individual models, and their reputation — not always deserved — for inferior quality and gas mileage, began to suffer. So began the slide into the bankruptcy that is the immediate cause for Chrysler and GMs termination of long-time dealers like the Colemans.

But that isn’t what is driving the huge plunge in car sales, says Berko. That is not what caused the crisis. He fingers the culprit with just two words: Home equity. Or rather lack of home equity.

“People used home equity loans to buy cars,” Berko says. So many homes have lost so much equity, and so many banks have become so much more cautious with their lending, that discretionary car buying has ended.

“People were buying extra cars, play cars,” Sandler adds. “So much demand was fueled by easy credit. No down payment, drive it today. Cars were an impulse purchase. That’s gone. There’s a sea change with the attitude of consumers. They’re more rational. They’re more nervous.” He doesn’t see this changing any time soon.

Berko points out that no one really needs to buy a new car every year, or even every three or five years. “When I was a kid, you could have major repairs at 12,000 miles,” he says. “Now it’s 60,000 or 90,000. You have a three year or a five year warranty. There’s no reason to buy a new car. It’s a luxury, not a necessity.”

Among the car companies, which will be the winners? “In the short run, Honda, Toyota, Nissan, possibly Hyundai and Kia, will be the winners,” says Sandler. “Some of the domestic cars that remain will do well.”

One of the survivors probably will be Saturn, whose hood was all the way into the noose at the beginning of June. GM had announced that it was closing the company’s legendary Spring Hill, Tennessee, factory, site of the widely touted owner picnics held in the brand’s early years. All of the dealers were to be terminated. All of the showrooms were to be closed. The obit had been written.

After these announcements, in the last days of May, Sandler, making arrangements for an interview, mentioned that he would be tied up on June 4 and 5. “I’ll be in Detroit, meeting with Penske,” he said. Coincidentally, Roger Penske, owner of Penske Racing and also of Penske Automotive, a 300-franchise, 40-brand automobile dealership network, turned up in the news at just that time. “He had to postpone the dinner,” says Sandler, who was in Detroit, all ready for the meeting with the Penske, with whom he had done deals in the past.

Penske’s appointment calendar had to be rearranged. He was deep into meetings, and on June 5 there was surprising news. He was going to buy Saturn, a purchase that is expected to go through and to save 350 dealerships and 13,000 jobs.

There is speculation that Penske, who introduced the Smart Car in the United States, will use the Saturn network to bring ultra-gas-efficient foreign cars, possibly from China, to the United States, and to brand them as Saturns.

Sandler is bemused by this turn of events. “It turns everything upside down,” he says. “The car business has never worked this way. Always there was a car first, and then there was distribution.” Penske, legendary for his successes in auto racing, is putting the distribution channel first. He has said that he will outsource manufacturing. “GM is doing the manufacturing for just a year-and-a-half,” says Sandler. “Who will do it after that?”

While he is withholding judgment on how well this upside down car company will work, Sandler has no doubts about Penske’s abilities. “I would bet on Roger,” he says.

Sandler is also upbeat about his own business. This has been a soft year, but he and his associates are keeping busy. Donald Keithley, working from California, spends nearly all of his time on the yearly Bel Air car Elite Dealer Conference, which has featured the likes of Jim Press, Chrysler’s president, as keynote speakers. Sandler, who does not advertise at all, says the conference is an invaluable source of business for his company.

He is currently wrapped up in a case where he is appearing as an expert witness, analyzing and testifying to a dealership’s value, and everyone in the firm has a good amount of similar work, putting values on dealerships for everything from divorce cases to re-financings.

Butler, noting that the average age of car dealers is in the 50s and 60s, sees big opportunities ahead. While dealerships may not be sold to public companies at the pace they once were, there will always been a market for most of them. The dealer across town may be interested or a would-be entrepreneur might want to invest in a profitable car dealership.

“Either your kids buy your business, or you sell it,” he says. This makes both Bruce Coleman and Dick Greenfield potential Bel Air clients. Each says that his children show no interest in continuing the family business. Right now it is certainly not an easy way to make a living. What’s worse, Chrysler and GM have shown that even the most solid, multi-generation car dealership, no matter how well-managed and integral to its community, can be snatched away in a second, with no warning and no compensation.

But Coleman’s car dealership has evolved through the years, adding and shedding brands and locations, just as the car industry has evolved. Now the industry is exhausted, battered by foreign competition, brought low by the deepest recession in two generations, and flummoxed by consumers who want tiny fuel efficient cars when gas prices are up and hulking SUVs when prices are low.

Surveying the scene at the height of car choas and the depth of the recession, Sandler looks for acceleration as soon as the dust settles. There will be a new day for the car industry and for the Colemans of the industry. Many of those shut down by Chrysler will pick up new franchises, he predicts. Others will move more heavily into used car sales, which is a higher margin business than new car sales.

Sandler, a self-described car nut, is doing his part to keep the industry robust. “I own three cars,” he says.

“Wait, isn’t it four?” asks Berko.

“No,” replies Sandler, “I just sold the Ferrari.” That leaves him with a Mercedes SUV, a Porsche Boxster, and a 1967 MG. No domestic cars? While he is not a typical consumer, Sandler’s answer goes a little way toward explaining Detroit’s woes. “We tend to buy cars from our clients,” says Sandler. “Most of them sell foreign cars. That’s where the money is.”

Bel Air Partners LLC, 71 Tamarack Circle, Skillman 08558; 609-252-1125; fax, 609-252-1322. Sheldon Sandler, senior managing director.

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