Dust rises daily from Prestige Ford in Garland, grit that doesn't quite fit this spare era.In the worst new-car market in 25 years – and at a time when most car dealers are cutting way back – Prestige owner Randall Reed is spending $6 million to extensively remodel a portion of his dealership and convert his former new-car operation to a used-car superstore.

LOUIS DeLUCA/DMN

Owner Randall Reed is converting Prestige Ford-Lincoln Mercury's new-car lot into a used-vehicle business similar to a CarMax, and expanding the former used-car facility across the street to house new-car sales. The dealership moves into the new Ford showroom today.

Despite the near-collapse of General Motors Corp. and major financial problems at Ford Motor Co. and Chrysler LLC, Mr. Reed believes Ford will bounce back.

"I know what the future holds, what product we're getting," said Mr. Reed, 49, who also owns Park Cities Ford-Lincoln Mercury in Dallas and three Ford dealerships in the Houston area. "This is the time to build the infrastructure you will need to support that future."

His project was prompted partly by the rapid deterioration of the new-car business this year. With sales at Prestige now less than half what they were at the dealership's peak eight years ago, Mr. Reed decided he could no longer justify the rent on his 50,000-square-foot facility at Garland Avenue and Shiloh Road.

Originally, he planned to move his entire new-car operation – along with a Lincoln Mercury franchise he acquired in March – across Shiloh Road into Prestige's used-car facility. Mr. Reed owns that property, which also houses the dealership's service, parts and collision-repair departments.

After the owner of the new-car site offered to renegotiate the lease, Mr. Reed expanded his plans in what he acknowledged might be his boldest move in 30 years in the business.

"There's not a dealership anywhere that is not struggling some," he said. "But I'm very confident that the tide will change for Ford."

So confident, in fact, that he is enlarging the former used-car facility to include a stylish 45,000-square-foot showroom for Ford and Lincoln Mercury, a second floor for office and training facilities, a cafe and a separate sales area for Internet customers.

He will convert the former new-car site into a large used-car operation that will look and function much like a CarMax, he said. Profits are generally higher on used cars, and Mr. Reed hopes to sell 200 to 300 vehicles a month from a facility that was once the nation's top seller of F-Series pickups.

While other dealers applaud Mr. Reed's bold plans, most are busy retrenching, preparing for a local market that is likely to decline at least 10 percent this year.

Sales in the four-county Dallas-Fort Worth area dropped 18.3 percent in October and are down 8.5 percent for the year, according to The Freeman Metroplex Recap – compared with national sales that plunged 31.9 percent in October and have fallen 14.6 percent this year.

"It's amazing how quickly it's gotten ugly," said Drew Campbell, president of the New Car Dealers Association of Metropolitan Dallas. "This is a consumer-driven economy, and the consumer has stepped off of Main Street."

Although none of the 240 or so new-car dealers in the area has been forced to file for bankruptcy, Mr. Campbell said, the National Automobile Dealers Association estimates that 750 of the nation's 22,000 new-car dealerships will close this year, and another 900 to 1,000 next year.

"This is about equal to the '90-'92 recession, though not as bad as the '80-'82 recession," said Paul Taylor, chief economist for the NADA. "But the financial pressure is there for dealers, and it's how you're managing it that determines the pain."

Dealers in the Dallas area are buying fewer new vehicles from their factories and maintaining leaner inventories, Mr. Campbell said. Most also are cutting their advertising, postponing capital expenditures and leaving vacancies open or even laying people off.

"I have never seen it so tough," said Leo Griggs, a 30-year veteran of the business who owns Park Cities Dodge-Chrysler-Jeep in Dallas.

Business at his store is off about 28 percent, he said, forcing him to reduce his staff at the dealership from 102 employees five months ago to 78 now.

"Consumer confidence is out the window," Mr. Griggs said. "So you get streamlined. You get back to fighting weight."

Meanwhile, Snell Buick-Pontiac-GMC in Dallas is relying more heavily on used-vehicle sales and service as the new-car business withers – like many other dealers.

"The quicker the government does something with the bailouts they're talking about, the faster our business will rebound," said owner Jim Snell, who estimated his sales are off 10 percent. "The negative news about GM is probably hurting our business."

Sport City Toyota of Dallas also expects sales to be down an uncharacteristic 10 percent this year.

"When you boil it all down, nothing has really affected us except people are worrying about things they can't control," said Sonny Morgan, managing partner of the dealership.

Mr. Reed, who used an amusement-park theme to distinguish his Planet Ford dealership in the Houston area, intends to be ready with a new look at Prestige Ford-Lincoln Mercury when the economy regains some strength.

The dealership plans to move into the Ford part of the new facility today. The Lincoln Mercury showroom should be completed in about two months, he said. Both should help push Prestige's new-vehicle sales from about 2,000 this year to 3,000 or so in the next couple of years, said Mr. Reed, who got his start in the business as a mechanic.

"We're making some headway in a down market, and we'll get this dealership back where it deserves to be," he said. "Markets ebb and flow. But there will be a top dog, and I want to be that top dog."