No WNY GM dealers on the list for closing
By Jonathan D. Epstein
NEWS BUSINESS REPORTER
Western New Yorkers’ devotion to U.S. carmakers paid off for the second time this week, as none of the area’s roughly 26 GM dealers appears to have been targeted in the current round of cuts by General Motors Corp.
The Detroit automaker sent letters to 1,100 dealers, notifying them that their sales and service franchises would not be renewed in October 2010 because they were not meeting performance expectations, GM said Friday.
That’s an 18 percent reduction in the company’s total dealer network of nearly 6,000. And it’s part of a larger effort to reduce GM’s dealership ranks to as low as 3,600.
New York was one of the five hardest-hit states with 266 dealers targeted, along with California, Michigan, Ohio and Illinois. The company did not release a list of targeted dealers, and would not indicated if any locally were included, saying that’s a matter between the dealer and GM. But calls to local dealers Friday found that none had received the much-feared letter, or expected to.
“I’ve talked to just about every one of our GM dealers, and no one has indicated that they received a letter at all from General Motors,” said Paul Stasiak, president of the Niagara Frontier Automobile Dealers Association.
“I know 1,100 dealers got it around the country,” he said. “We didn’t have any of it today.”
Area dealers said they were confident of their positions.
“I know for a fact I’m not getting closed. I passed the test a long, long time ago,” said Charlie Keller, owner of Keller Chevrolet in Cheektowaga. “I’ve already talked to people. I’m not concerned at all.”
It marks the second time in as many days that the region escaped such a threat almost unscathed. Chrysler LLC on Thursday filed with U.S. Bankruptcy Court a list of 789 dealerships it plans to close as part of its restructuring, and only two dealers in the eight-county Western New York area were on the list.
That’s in part because Western New Yorkers are loyal to domestic brands, including GM, Chrysler and Ford.
“It is one of the strongest areas for Ford and Chevy,” said Carl Emerling, owner of 65- year-old Emerling Chevrolet in Boston. He also owns a Ford dealership in Springville and is a partner in two dealerships in Arcade and Gowanda. “Your Western New York Chevy dealers are very strong.”
“GM has a large presence with the Tonawanda engine plant,” said Jim Ball, owner of Jim Ball Pontiac GMC in Orchard Park. “There’s a lot of GM employees and Ford employees here. It’s a big domestic town, so maybe it calls for more dealers.”
But Stasiak said he’s not sure how long the good luck can last, noting that GM has not formally announced what will happen to Pontiac, Saab, Saturn and Hummer dealers. The auto-maker said last month it would close the Pontiac brand, and it’s trying to sell the other three.
“Most of our guys will not get anything this first round, but I think the next one will not be as favorable,” he said. “There’s going to be more cuts coming.”
Indeed, Don Daniels, president of Checkpoint Foreign Cars in Tonawanda, did get a letter, but it was about his Saab franchise, not his performance. The dealership also sells used cars.
“We got the letter, but it didn’t say a hell of a lot that we didn’t know,” he said. “I think Saab will probably stay. They’ve got buyers pretty much lined up now.”
GM has received $17 billion in government loans and is angling for more in hopes of avoiding bankruptcy.
In recent months, the company has cut production dramatically, announced plans to close 16 factories, and slashed tens of thousands of hourly and salaried jobs. But the company still has a June 1 deadline to obtain concessions and agreements from bondholders and the United Auto Workers union, or file for Chapter 11 bankruptcy protection.
“This has been a difficult process. We took it very seriously,” Mark LaNeve, vice president of sales, service and marketing for GM, said on a conference call with reporters. “It’s a move that some could argue should have been taken years ago, but this leadership team has no choice but to take it now.”
LaNeve said the company analyzed each of its dealers over the past few weeks, to see which ones were not meeting performance measures as stated in dealer contracts. Those include thresholds for sales, sales effectiveness, customer satisfaction, dealer profitability and dealer capitalization.
In the letters received Friday, under-performing dealers were notified that their five-year contracts with GM would not be renewed when they expire in October 2010. That advance notice gives the dealers time to wind down operations and sell remaining inventory, with support from GM, LaNeve said. Otherwise, GM must repurchase and transport the unsold cars.
Another 500 dealers will be removed from GM’s ranks when it sells or otherwise disposes of the Saab, Saturn and Hummer brands. That will leave about 4,400 dealers, of which 90 percent “will be offered a chance to move into the future with GM,” LaNeve said. The company also expects a few hundred others to drop out voluntarily.
Area dealers said they hadn’t been too worried in the first place.
“We thought with their formula that we were in good shape here, because of what we do in our area of responsibility,” said Emerling, whose father started the Chevy dealership in Bostonr in 1944.
The dealership is ranked fifth in the state for its effectiveness in its market area, posts one of the highest marks for customer satisfaction, and sold 600 new cars last year, well in excess of GM’s goal for it of 155 cars. “We were never really worrying too much about it, but then again, you never know,” he said.
“The only thing I know for a fact is that Paddock Chevrolet is going to be here for a long time,” said Duane Paddock, owner of Paddock Chevrolet in Kenmore, which, at times, has been crowned the largest-volume Chevy dealer in the country.
