Hit and Run: GM shakes small town dealers

June 14, 2009

Hit & Run
GM Shakes Up Small Town Auto Dealers

By Anne Stanton 6/15/09

Wanna’ test drive a Cadillac?
If you live in Traverse City, you’re in luck. But it won’t be so easy—down the road—if you’re in Harbor Springs, Ludington, Manistee, Petoskey, or the Upper Peninsula.
“I was told that from Muskegon all the way to Traverse City, dealers are losing their Cadillac franchises. That’s a pretty big area,” said Bob Yates, a dealer in Manistee who will continue to sell Chevrolets, but lose his Cadillac franchise in October of 2010.
“My customers—if they’re adamant about buying a Cadillac—will have to drive 100 miles south or 65 miles north to accomplish that feat. That’s the reality. That’s the crux of it.”
Meanwhile, the survivors of this month’s shake-out will be expected to razzle-dazzle customers with stand-alone showrooms (meaning a single line of cars). The intent is to showcase the fleet of General Motors, a company in which the American people now have a vested interest.
Cherry Capital Cadillac Subaru is the lucky survivor in the Cadillac shake-out. Rumor is that it will have to sell Cadillacs in a stand-alone showroom, so Subaru will have to find a place of its own.
“Every dealer that’s signed to play ball with General Motors and go forward with this process is going to be required to do what McDonald’s has done—create a façade in a stand-alone building with a trademark image. And you’re going to have to commit to that. I have the letter right in front of me,” said Joe Godfrey of Godfrey Chevrolet Buick in Cadillac.

THE BUZZ:
Here’s a brief rundown of what dealers heard last week.
• Fletch’s of Petoskey will keep Buick and GMC, but phase out Jeeps and Pontiacs.
• Dave Kring’s dealership in Petoskey will keep Chevrolet, but lose Cadillac.
• Highpoint Auto and Truck Center in Cadillac will lose Cadillac and Pontiacs, but will likely get Buick and GMC, which the dealership considers a plus.
• Joe Godfrey’s dealership in Cadillac will keep Chevy, but lose Buick—a loss he’s contesting.
• Rumor has it that only one GM dealership will remain in the Upper Peninsula and that Marquette stood as victor.
• Bill Marsh and Williams Chevrolet in Traverse City are status quo, although Pontiacs will be phased out as elsewhere in the nation. “We’re fortunate and we’re thankful,” said George Chichester, Williams’ general manager.
• Ted Benchley of Benchley Buick Pontiac GMC in Manistee said he has heard no information, good or bad, at this point.
• Fox Charlevoix heard the worst news; it will lose its entire General Motors franchise (Chevy, Pontiac, Buick and Cadillac) on October 31 unless it wins its appeal to remain open. The dealership is owned by Dan DeVos, a multi-millionaire who works and resides in Grand Rapids.
In an internal memo to employees, DeVos wrote he was “shocked” at the news that GM was not renewing its dealer agreements with the Charlevoix dealership, along with another in Alpine Township.

SLASHING DEALERSHIPS
The dealership closings are part of an effort to make Chrysler and GM profitable again. Chrysler has moved to slash 800 dealerships, while GM plans to eliminate 2,600 of its 6,200 dealerships.
Dealers, interviewed by Express, tried to be upbeat for the record, but a few puzzled over the logic of closing dealerships. A dealer adds to the bottom line, while charging nothing for its showroom overhead. And the closure of dealerships will make buying a car a lot tougher for those living in rural areas.
Yates has been a Cadillac dealer for 29 years, selling about 25 cars a year. He acknowledged that his volume isn’t high enough to sustain a stand-alone dealership, but his Cadillac sales have been an asset to GM.
“In my mind I’ve done a good job,” said Yates, who wants to reassure customers that he will continue to sell Chevrolets and service Cadillacs. “I don’t argue that we’re not high volume, but I also think my customers will tell you that we are service oriented. And that’s what people want when they deal with that kind of a car. For a lot of customers, we pick up a car and deliver it to them. The new logistics won’t permit that kind of special treatment.”
Wealthier customers who buy Cadillacs are also rather demanding customers, in general, for whom time is money. That’s why dealers wonder if a Harbor Springs resident will bother to drive two hours down to Traverse City to buy a Cadillac. Or will they opt for convenience and buy a Ford Lincoln from the much closer Brown Motors in Petoskey? Dealers complain that this first decision by the Obama team doesn’t bode well for General Motors.

CALLING CONGRESS
Otto Belovich, owner of Cherry Capital, suggested that if you feel some of these changes will be a hardship for rural areas, to call your Congressional representatives and let them know. In fact, U.S. Rep. Bart Stupak held a sub-committee hearing on June 12 to discuss the closings.
“Even though discussions on auto industry restructuring have been occurring for months, most dealers, local communities and members of Congress were caught off guard by the recent dealership closures and particularly the abrupt timeline for the closures,” he said in a press release.
Joe Godfrey believes that the decision to tighten up the dealerships is a mostly positive one. He points out that GM will still have more sales outlets than foreign cars, and getting cars serviced will remain accessible.
“And every single dealer that’s going to make it is going to work harder and smarter than they ever have,” he said. “This is a continuing process. What their objective is, in all fairness to GM, is to get the strongest dealers and build. This is a once-in-a-lifetime opportunity to build the strongest corporation that they possibly can, and it’s inevitable. They had to reinvent GM and Obama is doing it at lightning speed. And he’s doing it 100 percent.
“I don’t know why Buick was taken away from me—it’s a shame, and I’m contesting it. But Chevrolet will be the franchise to have, and it will compete neck-and-neck with Toyota,” said Godfrey, pointing out that the 2008 Chevy Malibu was North American Car of the Year.
Bill Marsh Jr. said that that the bankruptcy was good for Chrysler, in part, because people don’t like uncertainty. “We had one of our best Chrysler months of the year in May.”

CASH FOR CLUNKERS
Dealers hope that a proposed rebate plan called “cash for clunkers” will help fuel sales. Customers will receive a $4,500 rebate when they trade in their gas guzzler for a fuel-efficient car.
During a long interview, Godfrey, the consummate salesmen, couldn’t resist inviting Express readers to come into their nearest dealership and test drive the latest models.
“My suggestion if you haven’t driven a GM vehicle in awhile, give us a shot. Come into the dealerships and talk to me. What we have now is fabulous, fabulous! And you’re talking to a guy, who used to sell Toyota,” said Godfrey, who also urged people to read the book, Why GM Matters, which outlines the positive impact of buying domestic, even in a global economy.
Steve Brown of Brown Motors said that if you’ve driven a foreign model for the last decade, it’s time to see how far Ford has come. Ford’s slogan, “Have you driven a Ford lately” has taken on new meaning, he said.
Randy McClure, a retired General Motors worker living in Traverse City, believes Americans need to understand the job impact of buying a domestic car, but they also have the right to expect competitive products.
“I believe GM is really coming back, but they have this image problem as do the other domestic companies, and they earned it back in the ‘60s and ‘70s. If they had a smart person, they’d find a way to get around that image. That’s what’s holding them back.”

To find out which car purchase supports the most American jobs, go to www.levelfieldinstitute.org.