Olds dealers filled with grief, anger

Anger. Frustration. Denial. Resignation.

All the classic emotions tied to a death. Or, in the case of the Oldsmobile make meeting at the NADA convention, the death of a franchise.

Take Tench Phillips Jr. for example.

Phillips has devoted 37 of his 71 years to Oldsmobile, his sole General Motors franchise. He also has Land Rover and Mercedes-Benz franchises in the same facility. As the last speaker at the make meeting, he spewed a list of alleged sins committed by GM. But GM executives won't have to pay for them, Phillips argued. Dealers will.

"They are not just getting rid of Oldsmobile,'' said Phillips, owner of Phillips Automotive in Virginia Beach, Va. "They are getting rid of dealers."

Phillips spoke for many who said they couldn't speak freely. Some of them are negotiating with GM for another franchise to replace Oldsmobile. Others have other GM franchises and don't want to jeopardize their relationship with the automaker.

GM's Bill Lovejoy, group vice president for North American sales, service and marketing, expressed sympathy. "I hear and I understand your anger, your fear, and your concerns,'' he told the Olds dealers. "We all do. Nobody at General Motors wanted to lose Oldsmobile, a very valued member of our family.''

'Nothing to lose'

"The dual dealers figure they've got to be nice to GM because they've got other brands, but since I only have Oldsmobile I have nothing to lose," said Phillips. "I was sarcastic, bitter, and I meant every word I said."

Dealers lauded Phillips after the meeting for speaking his mind, even if they disagreed with him.

Other dealers, like Phillips, feel betrayed. Many had invested heavily in their facilities, and all had recently signed a new franchise agreement. They view the financial settlement, which had been sweetened just before their arrival at NADA, as woefully inadequate for the many years they and their employees have dedicated to the franchise. Some hoped they could change GM's mind.

Other dealers called the settlement offer fair. They've moved past the shock and anger to acceptance. It's time to move on, many said.

Others were simply frustrated. GM executives had deflected questions from Oldsmobile dealers at the GM make meeting the day before, saying they would be answered at the special Oldsmobile make meeting the next day. But answers were in short supply, dealers felt. "Same old, same old," said one dealer as he emerged from the packed meeting.

GM executives do say that the company shares some responsibility for Oldsmobile's failure. But they also note that their settlement offer exceeds what is required by law or by the franchise agreement.

New terms

GM's most recent offer, which dealers received by fax just before the convention, adds extra payment for dealers with special circumstances. It adds a fee for those who have invested in facilities. It provides more money based on the Oldsmobile units sold within the dealership as compared with the dealership's overall sales, a change that would provide the most money to the dealers most dependent on Oldsmobile. The potential for what a dealership could receive increases to $3,100 per vehicle, from $2,400.

One sticking point is that the payments dealers would receive from the settlement would be taxed as ordinary income, which could cost them 20 percent more than if the payments were considered capital gains. Dealers hope some or all of the money can be categorized as capital gains.

GM told dealers at the meeting that so-called "special circumstances" will be uncommon. But interviews with dozens of dealers suggest that all 2,800 dealers see themselves as unique.

Consider:

Alvin Dvorak, dealer principal of Ed Bozarth #1 Oldsmobile in Colorado Springs, Colo., is one of 63 stand-alone Oldsmobile dealers. He called the current settlement "insulting," and said he is waiting for an offer that reflects his special circumstances. He invested heavily in his store recently, based on an assurance from GM that Oldsmobile had a long future. Dvorak would like another GM franchise as part of his settlement, but none is available.

Jerold Williamson, owner of Williamson Oldsmobile-Volkswagen-Kia in Lincoln, Neb., said the buyout offer won't cover his expenses, especially since 40 percent of it would go to the government as taxes on ordinary income. He said it would not cover termination pay he feels obligated to give loyal employees, many of whom have worked for him for decades. Some of them joined him at the Oldsmobile make meeting.

Bob Edwards, dealer principal of Edwards Auto Sales, an Oldsmobile-Jeep-Ford dealership in Walhalla, S.C., says he will sell Oldsmobiles as long as possible. He echoed Phillips, saying dealers are paying for mistakes made by GM.

"These are good dealers. They sold over a million cars for Oldsmobile in the 1980s," Edwards recalled. He proudly said he sold 1,200 Oldsmobiles annually in its heyday. His Olds sales have dwindled to 500 a year.

Jon Agresta, owner of Agresta Oldsmobile-Pontiac-GMC in Williamstown, N.J., called the GM offer fair. He sits on the Dealer Advisory Forum, a committee of GM dealers that advises GM.

Randy Farnsworth, owner of Farnsworth Chevrolet-Oldsmobile-Cadillac in Canandaigua, N.Y., has moved from anger to acceptance, though he will lose a franchise his grandfather established in 1923. Farnsworth, who also has a Pontiac-Buick-GMC store, has invested heavily to obtain all of GM's franchises except Saturn in recent years to be in alignment with GM's channeling strategy.

"It's time to move forward," he said.

GM officials say Oldsmobile could continue for three to five years. However, some dealers say they'll be out of business in a year to 18 months because they plan to quit ordering vehicles.

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