Surviving Chrysler & GM dealers optimistic about future Business

by Mary Wisniewski

Back in May, General Motors announced that, as part of its government-backed reorganization efforts, only 2,400 of the roughly 6,000 current General Motors dealership franchises would not survive beyond October 2010 because of enforced closings and natural attrition. Laurel, Mont-based Fichtner Chevrolet is not one of them. Ken Fichtner, dealer principal, learned his shop was spared the chopping block by way of a letter delivered last May, welcoming him to the new GM.

“I was elated,” says Fichtner. “Everyone was on pins and needles. It’s your livelihood…Folks are depending on you to be the cornerstone of the community. [We] had to wait for fate.” Although GM projects closing roughly 2,000 dealerships over the next year or so, and Chrysler, LLC has already closed 789 franchises through the bankruptcy courts, surviving franchises like Fichtner Chevrolet are optimistic about the future. “I’m not especially worried [about future performance] given the fact that I know my market will increase in size,” Fichtner says. “What [GM] is asking is not unrealistic. They expect us to stock more and sell more. We are well-positioned.”

Some of GM’s remaining-dealer demands include stocking more vehicles, maintaining a quality facility, keeping competition out of the same showcase, and selling more cars. How many more is not yet known to dealers. Fichtner received a follow-up letter that articulated GM will contact each dealer with more specific objectives after the bankruptcy proceedings fade. Fichtner, for one, is already preparing for this future – the dealership is expanding its pavement to make room for more vehicles, a project that commenced the day Fichtner signed the new GM agreement.

Like Fichtner Chevrolet Simms Chevrolet, has also received a renewal letter from GM. The letter stipulated that the Clio, Mich.-based dealership sign an agreement that outlined new dealer conditions, including not suing GM to become part of the new team, says Bruce Simms, owner and manager. As of the end of June, the letter was the only document Simms had received regarding the new GM, but he expected future contacts and mandates to occur now that the manufacturer has reemerged from bankruptcy.

Although the future is uncertain, Simms isn’t worried. “I’m looking forward to [GM] getting it right,” he says. “My sales in Genesee County are pretty good. In my opinion, there [have been] too many dealers to slice the pie up, which makes it tough.”

As dealerships dissipate, GM and Chrysler dealerships like Simms Chevrolet and Fichtner Chevrolet will have more responsibility. Some additional duties include taking redistributed inventory from winding-down dealers, stricter floorplan requirements and additional sales pressure, says Terry Burns, executive vice president of the Michigan Automobile Dealers Association. “It’s back to the trenches,” says Burns.

But even with the upcoming onslaught of closings, Burns says retained dealers aren’t afraid of future brand performance. “The dealers have plenty of inventory and great product, and are focused on selling,” he says.

Ron Poulin of Rochester, N.H.-based Poulin Auto Country is well-versed in both termination and non-termination, receiving dichotomous news from his manufacturers: Chrysler said his dealership could carry on with business, while GM told Poulin to wind down.

Poulin says the Chrysler letter was rather generic, not yet placing new conditions on his business. [Chrysler’s sale to Fiat had not yet been finalized when Poulin received this letter.] The dealership aims to become stronger in the Chrysler product line.

“We have taken additional product that is being dispersed from dealers being closed,” Poulin says, noting the process has been smooth so far and anticipates ordering more products as soon as Chrysler rolls them out. As for his GM business, Poulin says, “You always have the hope that Congress will reverse what is going on, but we are basically in wind-down mode.”

Although it has been told it is a “slouch” by the manufacturer, Poulin says the community has rallied behind the dealership. “It’s very heartwarming to know you have much support,” Poulin says. “As we go forward, we know we will have support from the community.”

Fichtner Chevrolet is ready to move forward, too. “I’m very excited about Chevrolet in particular,” says Fichtner. “[It’s} the best products we have ever had….I’m pleased I’m a Chevrolet dealer.”

Government Program Boosts GM, Chrysler Dealerships ’ Sales
Chrysler and General Motors franchises given a reprieve by their manufacturers received a nice summer treat: more sales, spurred on by the U.S. government’s Cash for Clunkers program, which lets consumers trade in their gas guzzlers for up to $4,500 vouchers toward the purchase of a new, more-fuel-efficient models. Specifically, General Motors benefited the most from Cash for Clunkers (officially the Car Allowance Rebate System), scoring 18.7% of the new vehicles purchased under the program, while Chrysler received 10.6% of Cash for Clunkers’ sales, fifth-most in the nation, according to the Department of Transportation.

The Top 10 vehicles purchased through the program, as of early August, were, in order: Toyota Corolla, Ford Focus, Honda Civic, Toyota Prius, Toyota Camry, Hyundai Elantra, Ford Escape (with two-wheel drive), Dodge Caliber, Honda Fit and Chevrolet Cobalt. And which cars are getting “clunked?” Lots of GMs and Chryslers, including the Ford Explorer, Ford F-150, Jeep Grand Cherokee, Jeep Cherokee, Dodge Caravan/Grand Caravan, Chevrolet Blazer, Chevrolet C1500 Pickup, and the Ford Windstar.

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