Ozarks GM dealers remain in driver's seat

General Motors Corp. dealerships in the Springfield area weren't among the 1,350 franchises that received dreaded "wind-down" letters from the ailing automaker last month, and their corporate pardon wasn't a fluke.

Two weeks before GM filed for Chapter 11 bankruptcy protection, the Detroit-based manufacturer sent letters to underperforming dealers that signified the beginning of a 15-month wind-down cycle for its feeblest franchises, said GM spokesman Pete Ternes. Ternes wouldn't say how many of Missouri's 160 GM dealers received the letters.

In deciding which of its 6,000 dealers to cut, GM looked at the age and quality of dealerships, their profitability over a rolling average of several years and how well-capitalized dealers were, Ternes said.

Each dealership's customer satisfaction ratings and geographic business base also figured into the evaluation process, he added.

"(Springfield) could be a good market that has the right amount of dealers to support the consumers that are there," Ternes concluded.

Instead of wind-down letters, area dealerships received agreements to continue selling what's left of the downsized family of GM brands - Chevrolet, Buick, Cadillac and GMC. Casualties of GM's corporate restructuring plan include Pontiac, which will be discontinued by Oct. 31, 2010, and the selling off of Saturn, Hummer and Saab.

The 363 code

GM (OTC: GMGMQ) has invoked Section 363 of the U.S. Bankruptcy Code, which allows the company to retain the strongest parts of its business and sell off less profitable assets without a court-approved consensus of its creditors. Once the Section 363 sale is complete, GM plans to proceed with its expedited reorganization, which officials have said will result in a much smaller GM with a healthy balance sheet.

Craig Preston, owner of Bill Roberts Chevrolet-Pontiac-Buick Inc. in Bolivar, is enthused about the prospect of a new GM despite the loss of Pontiac and consumer confusion surrounding the automaker's bankruptcy.

"GM is trying to reinvent itself," he said. "They have a long history of legacy costs that other manufacturers they compete against do not have. By going through this process, they are shedding those costs, so they should be very competitive going forward."

On the upside, newer models - like the revamped Chevy Camaro and the Buick Enclave, a popular crossover SUV - are doing well, said Preston, who's encouraged by GM's stated commitment to Buick, a brand that sells more units in China than in North America.

"Buick's products - current and coming - are some of the best in the GM portfolio," he said, adding that Buick tied with Jaguar for the No. 1 spot in the J.D. Power and Associates 2009 Vehicle Dependability Study.

Matt Mayse, general manager of Mayse Automotive Group in Aurora, is likewise eager to see a stronger, streamlined GM emerge from bankruptcy - an avenue he has advocated for some time. Mayse said his family-owned dealership - one of the largest in Missouri, with 1,200 vehicles on its lots - wasn't too concerned that GM would terminate its franchise agreement. According to www.mayseautomotive.com, the dealership sells more than 5,000 new and used vehicles each year.

"Generally, I think everybody has a pretty positive outlook now," Mayse said, noting that he hasn't heard of a single GM dealer in southwest Missouri who received a wind-down letter. "The worst is ... behind us."

Moving ahead

Some potential car buyers seem to have broken out of a holding pattern now that GM dealerships in the Ozarks appear safe and the debt-addled automaker has filed for bankruptcy protection, according to area dealers. Mayse said his salespeople aren't spending as much time answering questions about GM's fate or fielding concerns about whether dealerships would be around to do warranty work.

Lynn Thompson, co-owner of Thompson Buick-Pontiac-GMC-Cadillac-Saab in Springfield, said the dealership's sprawling lot on East Independence Street has been noticeably busier this month.

In the first week of June, the dealership sold half the number of new cars sold in all of May - and Thompson's treating that as a positive sign after several tense weeks for GM and its dealers.

"Honestly, I think there's a certain amount of relief out there for both the consumers and the dealerships," Thompson said. "It's exciting for us to see the people coming back in and showing the confidence in GM."

As local dealerships look ahead, a number of their peers across the country that were notified they would lose their GM franchises next year are appealing to Motor City's biggest player. GM spokesman Ternes said 500 dealers have formally appealed, and that GM has reversed about 15 of its decisions, based on further review.

About three-quarters of the dealers that received wind-down letters have agreed to sever their ties with GM, but some aren't taking the news so well. According to the Associated Press, at least two South Dakota car dealers have sued GM in federal court, claiming state law prohibits the corporation from terminating franchise agreements without a court hearing.[[In-content Ad]]