Herald Journal - Enterprise Dispatch - Delano Herald Journal
Local dealerships survive General Motors' cut

May 25, 2009

By Starrla Cray
Staff Writer

WRIGHT, CARVER, MCLEOD COUNTIES, MN – It’s business as usual for local General Motors dealerships, but it’s a different story for the 1,100 dealers nationwide who received notification May 15 that their franchise agreements won’t be renewed.

“It’s a really bad deal,” said John Tackaberry, owner of Star West Chevrolet-Honda Sports, Inc. in Delano. “Think of all the people who are affected by this.”

As for his dealership, Tackaberry said he was always confident that it would remain open.

“What are we going to be? The last of the Mohicans,” said Tackaberry, who has owned Star West for 29 years.

Garth Asplin, owner of Cokato Motor Sales, Inc., said his dealership was not affected either.

“Everything’s fine here,” he said. “We’re in pretty good shape.”

Donn Thurk, of Thurk Brothers Chevrolet in St. Bonifacious, said they have received “literally hundreds of phone calls” from people wondering about the closings. Thurk said his store is safe, and it’s “business as usual.”

The possibility of GM filing for bankruptcy is somewhat of a concern for dealers, however.

“Naturally, we worry day-to-day,” Thurk said.

“It’s very likely GM is going to file bankruptcy in the next two weeks,” Tackaberry said. “Nobody really knows what the flow will be.”

“GM’s going through a hard time,” said Jim Paul, owner of Valley Buick Pontiac GMC, which has dealerships in various locations, including Waconia and Hutchinson. Paul said his store is still open, and it is doing fine.

“Even stores that got a letter – it’s tentative,” he said. “I think it’s all subject to change.”

Examiner.com published excerpts of the closing letter GM sent to dealerships, including the following sample:

“Based on our review and current and foreseeable market conditions and your dealership’s historical performance, we do not see that GM can have a productive business relationship with (name of dealer) over the long term. Generally speaking, we would not expect our contractual relationship to continue past October 2010.”

The letter left open the possibility of reversal, with the following statement:

“Please understand that our planning in this regard is not finalized, and we are prepared to give you until the end of the month to submit any information you would like us to see.”

Because GM hasn’t yet filed for bankruptcy, the list of which dealers are closing hasn’t been made public. That hasn’t stopped speculation, however.

“People were creating their own lists,” Paul said. “There has been so much misinformation.”

“What we need more than anything is people spending more time being positive and going forward,” Tackaberry said.

“We’ve learned to take it in stride,” Thurk said. “The economy dictates our business. We’re waiting for it to turn around.”

General Motors has already received $15.4 billion in federal loans, the New York Times reported, adding that the company is spending $113 million more each day than it is taking in from worldwide vehicle sales.

“We’re independent businessmen,” Paul said. “Obviously, they wouldn’t be working with the government if it wasn’t necessary.”

The decision to eliminate more than 1,000 of its 6,200 dealerships was part of a restructuring plan that has to be presented to the government by June 1.

Dealers were judged on sales, customer service scores, location, and condition of facilities, among other criteria, the letter stated.

“We meet and exceed all of the criteria,” Tackaberry said. “Our facilities and the surrounding lot are impeccable. In this whole process, I had no fear.”

GM also plans to phase out the Pontiac brand and sell the Saab, Saturn, and Hummer lines. Warranties for these vehicles will still be covered, either by the car maker or its new parent company. The US government will also back the warranty if needed.


 

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