Dark days have come for the 2,600 dealerships that General Motors doesnt want any more. Most experts assume that GM wants to eliminate points in big urban markets.
But some rural dealers down south are convinced the automaker has been working in concert with GMAC since last year to squeeze them out of business.
Birmingham, Ala., lawyer G. Douglas Jones agrees. He told me he figures GM has a hit list and can now do things out in the open. Jones represents Ambercrombie Chevrolet in Hartselle, Ala., which in late February sued GM and GMAC for conspiring to force the dealership out of business.
That case is still pending so spokespeople for GM and GMAC wouldnt comment. But court records show that earlier this week both companies filed motions to dismiss. And GMAC spokesman Mike Stoller emphasizes that GMAC does not collude with GM to do the automakers dirty work.
Doug Jones isnt one of the usual special-practice attorneys hired by dealers to handle squabbles with their factories. He has a different background.
Two decades ago, while serving as U.S. Attorney for Northern Alabama, Jones led the investigation that nailed two former Ku Klux Klansmen responsible for killing four little girls during the infamous 1963 bombing of a Baptist church in Birmingham. Jones also was the lead trial attorney who got those two Klansmen convicted of murder.
The Ambercrombie lawsuit claims that GMAC arbitrarily changed the terms of the floorplan by demanding a 10 percent security deposit and accelerated curtailment payments on inventory in stock for more than 180 days. One thing led to another. Ultimately, the dealership couldnt comply so GMAC suspended its line of credit. Then GM put the dealership on cash hold and wouldnt reimburse the store for incentives or warranty work, which exacerbated the cash crunch.
Other dealers told me of similar patterns and scenarios. Jones says he has talked to many more dealers with similar stories.
But not all dealerships have reacted the same way.
David Cothern, one of the principles at Cothern-Varnadore Chevrolet in Baxley, Ga., told me his dealership filed for Chapter 11 bankruptcy protection in December and is still operating on a limited basis without the GMAC floorplan.
Late last month in Sweetwater, Tenn., GMAC terminated the floorplan at Ronnie Williams Chevrolet-Pontiac and trucked away the dealerships inventory. The dealership still has its franchises, but couldnt arrange floorplanning. With no vehicles to sell, it might as well be out of business.
Jerry Davis of Rapid Systems, a supplier of dealership management systems, says he sees a pattern. Davis, who is based in Atlanta, has clients across the south, including GM stores that have lost their floorplans. His theory is that GM figures it only needs a dealership every 70 to 85 miles and wants to prune those that are in between.
It could be that all the dealerships that lost their GMAC floorplans had legitimate creditworthiness issues. They may have been among the victims of the credit crunch that caused many lenders to tighten their policies. Perhaps it was the sour economy or their business decisions that caused the problems.
But if Davis is right about the geography and attorney Jones is right about a hit list, it could affect rural dealers across the country, and not just those south of the Mason-Dixon Line.
Well know soon enough.