Chevrolet dealer Phillip Alderman is appealing General Motors' decision not to renew his franchise agreement in late 2010, but he's holding out little hope.
"I know the appeal is bull because GM's going to go bankrupt in two weeks anyhow," says Alderman, who owns Colonial Chevrolet-Buick in Talladega, Ala.
Many dealers share his pessimism. Even though the current agreements of the 1,124 targeted dealerships last for another 11/2 years and GM is accepting appeals, some dealers have concluded that their businesses are viable for six months or less.
First, Bankruptcy Court looms for GM. And slowly but surely, customers and employees will start leaving targeted dealerships.
Also, GM is strongly defending the criteria used to pick the targeted dealerships.
The U.S. Bankruptcy Code gives judges wide latitude to ignore contracts and other legal protections of parties doing business with bankrupt companies. So dealers targeted by GM can be axed quickly if GM files for Chapter 11 protection.
GM CEO Fritz Henderson has said a GM filing is probable by June 1, the deadline given by the Obama administration's auto task force for GM to restructure on its own.
By the end of next year, GM plans to reduce its dealership count from 5,969 stores as of May 15 to 3,600. That includes shedding Saturn, Saab and Hummer dealerships, voluntary dealership attrition and some GM-managed closings and consolidations.
Dealer Ron Abercrombie, who got a termination letter from GM, says he'll appeal. He owns Abercrombie Chevrolet in Hartselle, Ala. He's not confident he'll win the appeal.