General Motors plans to end franchise agreements in October 2010 at 1,124 stores are drastic and far-reaching, the National Automobile Dealers Association said today, while many dealers stayed silent about their plights.
GMs plans, delivered to affected dealers via FedEx envelopes, will impact more than 63,000 dealership employees, NADA said in a statement.
Terry Burns, executive vice president of the Michigan Automobile Association, said dealer reaction has been mixed.
I have had everything from 'they were wrong in sending me this letter' to 'it's probably the time for me to go, said Burns.
It is difficult enough right now for a small dealer to get floor planning, to continue to get credit for the business operations, and this is another problem they have to attend to address, and it was just too many.
Loy Todd Jr., executive vice president of the Nebraska New Car and Truck Dealers Association, said GM targeted some rural areas.
"They are saying the same thing the Chrysler guys are saying, especially my more rural areas, the old family stores. I have people saying, 'I never cost them a dime. I have made a profit every year for 60 years, served my community and my market. Why me'?"
But most dealer groups contacted by Automotive News today said they have heard little from their members, so they dont know how to help.
Ted Smith, president of the Florida Automobile Dealers Association, said he had talked with one dealer as of mid-afternoon.
Hes had a very difficult time, he told me, developing any kind of strategy because he doesnt know if the next closest dealer has been impacted, Smith said. Because theres no way to identify whos received the letter, he cant see the big picture yet.
Smiths group was asking dealers to contact the association if they received a letter from GM today. He is planning a meeting next week to help those dealers and Chrysler LLC dealers who found out Thursday the automaker will terminate their franchise agreements on June 9 .
Smith knows Chrysler wants to cut 35 Florida stores, as the automaker filed in bankruptcy court the list of 789 dealerships it wants to terminate. Chrysler sought bankruptcy protection April 30 with plans to emerge as a new company run by Italian automaker Fiat S.p.A.
But since GM has until June 1 to restructure before a U.S. deadline, the automaker only told affected dealers of their probable future termination.
Here we sit at 2:19 p.m. on Black Friday, and we have no idea whats going on, Smith said. We have no idea how many of our dealers are affected.
Struggling GM dealers across the country didnt return phone calls or remained mum about their future status. An employee at Morein Motor Co. in Ville Platte, La., said the Chevrolet-Buick-Pontiac-GMC store had received a letter saying GM would reevaluate its franchise agreement when it expires, but declined to elaborate or compare her letter with one obtained by Automotive News.
The less news that gets out, the better, she said.
A manager at another GM dealership declined to comment on whether he had received a letter.
The NADA said it fully expects GM to honor all its obligations to the affected dealers, whether or not they decide to wind down their operations.
But what exactly GM owes its dealers is not certain. Dealers recourse will vary, depending on whether the automaker declares bankruptcy or merely lets the franchise agreements expire in October 2010.
The legal standing of todays letters is also uncertain, Smith said.
It becomes an unofficial warning letter, he said. But some of our lawyers believe that when youre notified that youre not being renewed, that is tantamount to constructive termination.
Rick Kranz contributed to this report