One of Minnesota's largest auto dealers, Denny Hecker Automotive, is struggling with tightfisted consumers and stricter underwriting standards from finance companies amid the global credit crisis.

"It's harder to get people financed ... and there is no deal good enough in many people's eyes right now to take the risk on a purchase of this size. So we struggle with this economic climate," said Barbara Jerich, president of Denny Hecker Automotive, which has 18 stores in Minnesota and three in California.

A hiccup that Jerich attributes to a recent change of banks hasn't helped, either. Several checks the Hecker organization had written to other dealers failed to clear this week and last.

But the biggest problem, she said, is that the sheer numbers of people coming in to shop for a vehicle ''are way down."

While customers are still buying Toyotas, Hyundais and Hondas, it's a different scenario with domestic autos. Jerich cringed when asked about Hecker's domestic auto sales.

General Motors sales finally picked up in September when the company offered the public discounts normally reserved for employees. "But as soon as the employee pricing went away the GM sales fell off," Jerich said.

Hecker is in the midst of restructuring his relationship with Chrysler, she said. Financing regular vehicle inventory, or "the floor plan" as it's called, is not an issue, she said.

"But Chrysler Financial and Denny have a relationship far beyond the [auto] floor plan. We have a rental car company and a number of entities where Chrysler is a partner of his. And I know they're working on restructuring debt and restructuring agreements between those two groups" she said.

Paul Walser, who owns Toyota, Honda, Chrysler, Jeep, and Dodge dealerships in the metro area, said, "We don't use Chrysler Financing for any of our [customers'] borrowing needs. But I think around here, Hecker is the biggest account with them."

Hecker's arrangement with Chrysler lets his stores finance consumer car purchases through Chrysler Finance, even when the car being purchased is a Hyundai or Volkswagen. But as the credit crunch rages on, Chrysler's underwriting guidelines have tightened and arrangements such as Hecker's are probably changing, Walser said.

Chrysler, the weakest of the Big Three U.S. automakers, on Friday announced it would lay off 25 percent of its white-collar workforce. That announcement follows deep job cuts among the production ranks in recent weeks. Chrysler's majority owner, Cerberus Capital Management LP, is negotiating a deal to merge Chrysler with General Motors Corp.

"What has happened with GMAC and Chrysler Finance is that they have tightened up and their bond rating has gotten worse,'' Walser said. "So they don't have [the] same availability of money to loan out [to car buyers]. They have to figure out a way to trim back. And so, they say 'Now we are just going to finance GM dealers or just Chrysler dealers."

Hecker, who did not return calls for this article, is well diversified and that should help with whatever becomes of his arrangement with Chrysler, Walser said.

News of Hecker's struggles has raced around the state's dealer network, prompting rumors that the business may be in trouble, a contention that Jerich denies.

"We are business as usual," she said. Some dealers gossip, hoping to "damage a business the size of Denny's with innuendo," Jerich said. "That is a tragedy that I am hopping we will avert."

A hiccup with checks

Several Minnesota dealers ran into problems this week and last week when they deposited checks written by Hecker stores. The checks were for cars Hecker bought from other dealerships.

The problem occured after Hecker changed banks on Oct. 15 from Wells Fargo to U.S. Bank. When dealerships deposited Hecker funds into Wells Fargo accounts, the bank refused to release funds immediately and instead stamped the checks "Refer to Maker," Jerich said. Wells Fargo is suddenly holding checks for 10 days or more, Jerich said. "It's been a nightmare."

Citing client confidentiality, Wells Fargo officials declined to comment on the matter Friday.

Peter Kolar, owner of Kolar Automotive Group in Duluth, said in an interview Thursday that he had problems with "three bad checks worth about $65,000" from Hecker. "Two from a Toyota store and one from a Hyundai store."

Kolar called Hecker's dealerships and was told: "We will overnight you another check. The check should be good," he said. "I talked to my bank and it verified ... that there were sufficient funds in their checking account. ... I sent the checks back through and hopefully they will clear."

The Kolar and Hecker dealerships have traded cars back and forth for years and never had money trouble, Kolar said. "They had some sort of mixup. And they had informed my office manager apparently."

Employees at other dealerships called the Star Tribune this week to complain about similar checking problems. As a result of the bank ruckus, "There are a couple of dealers in town who have put us on a cash-only or wiring-only basis for doing business back and forth," Jerich said "I don't blame these dealers. That is the same response I would have.''

Hecker Auto immediately contacted Wells Fargo. "I actually have a letter from them saying this is their standard operating procedure," she said. "We told dealers, as well as our stores ... not to do anything that is not a life-and-death transaction until we can figure this out. And we have done everything we need to do to make things right. We have certified funds and are wiring funds. That is the only way we can be sure that there is not going to be a hiccup in this."

Dee DePass • 612-673-7725