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'No news is good news' for Tri-Cities area GM dealers

NET News Service • May 15, 2009 at 12:00 AM

It seems GM’s ax didn’t fall on local auto dealers, whose emotions stayed on a string Friday as GM notified more than 1,000 of its dealers it planned to eliminate them — a move that drew mixed responses from several area GM dealers.

“I guess no news is good news,” Chaparral Pontiac-Buick-GMC owner Freddy Gonzalez said after Friday came and went without the dreaded FedEx letter from GM.

Longtime area auto dealer Bill Gatton, whose numerous dealerships include GM products Chevrolet, Cadillac and Saturn in the Tri-Cities, had predicted earlier Friday that Tri-Cities’ GM dealers would be spared, and Gonzalez also said local dealers hadn’t felt any local sites fit GM’s criteria for cuts, “although it was hanging over us all.”

“I’d say it’s a positive for the area, but not unexpected,” Gonzalez said.

Unlike Chrysler, GM has not declared bankruptcy, so a leaked list of affected dealerships like the one that came out this week about Chrysler is unlikely.

Whether or not any local dealers are forced out, Gonzalez said he doesn’t like the idea of top-down cuts being imposed on independent dealers who, he said, don’t cost GM.

“The recognition that there are too many auto retailers, especially domestics, is a discussion we’ve had for years,” Gonzalez said Friday. “But this is a country of capitalism, not socialism, and business environments have a way of taking care of those things the way they always have — or at least they’re supposed to.”

Gonzalez said the National Automobile Dealers Association has informed members that GM is unlikely to publish a list of affected dealers. NADA has strongly opposed the forced closures, which it calls unnecessary.

According to GM’s “Dear John” letters, delivered by FedEx, dealers were judged on a range of criteria including sales, location, condition of facilities, and customer service scores.

Steve Grindstaff, who owns Grindstaff Chevrolet in Elizabethton, likened current events to competition on the gridiron, with GM as coach.

“My heart goes out to the dealerships that will be closing, but I look at it this way,” Grindstaff said. “It’s like a game of football. The number one starters start, and if you’re not a number one starter, you sit on the bench or get cut. That’s basically the way we’ve looked at this thing the whole way through.”

Grindstaff said he called Chevrolet directly Friday “and we’re fine.”

“We haven’t really been worried about it. We have the volume and the CSI (customer satisfaction index) to maintain it.”

While he doesn’t see how slicing its dealer count will save GM much money directly, Grindstaff said he understands part of the rationale.

“I think they’re looking at it as a better solution because strong dealers will be better able to serve customers, and that should increase repeat business,” Grindstaff said.

For his part, Gatton said he could see some potential savings for GM, for instance through reduction of low-volume dealers in sparsely populated areas.

“Those kind of dealers can’t make money, and they certainly are a drag on the manufacturer to have to oversee them and call on them or work with them,” Gatton said of locations he said may only sell one or two vehicles a month.

He predicted non-urban dealerships that sell fewer than 25 or 30 vehicles a year probably will close, as well as some low-performing stores in bigger cities that are saturated with dealers.

“I don’t know enough about it yet to say it’s a good idea, but I don’t necessarily think it’s a bad idea,” Gatton said.

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