Area GM dealers safe - for now

By DAVID CLOUSTON

Salina Journal

Mike Money's south Salina auto dealership has sold Buicks since the late 1940s, and the dealership will keep selling the GM car line at least through October 2010, Money learned Friday.

The letter Money received from General Motors stated there would be no change in its franchise agreement with Warta Buick Subaru Suzuki through October 2010. It went on to say that Warta's Buick franchise would be evaluated at that time by the corporation.

GM said it would notify 1,100 U.S. dealers Friday about the status of their franchise agreements. Money, owner and president, said the letter he received contained "absolutely no surprises," and the dealership located at 2222 S. Ninth was maintaining business as usual.

"I think we're one of the few dealers around who hasn't laid off anyone, or cut benefits or anything," Money said.

GM spokeswoman Susan Garontakos said the company doesn't plan to make public a list of dealers to be cut, leaving it to dealers whether to release that news. Dealers expected to hear by telephone or FedEx letters that were supposed to begin arriving Friday.

Rival Chrysler, which is undergoing bankruptcy reorganization, announced Thursday it planned to drop 789 of its roughly 3,200 dealerships by about June 9. Chrysler was able to move so quickly since bankruptcy laws shielded it from complying with state franchise laws protecting the dealers. But those franchise laws are applicable and afford legal protection to GM dealerships.

"It's a sad day for the dealers, to be sure. Not knowing is the worst part," said Mike Lamm, vice president and general manager for Babe Houser Motor Company in Concordia. Lamm said Friday he had received no word from GM.

Babe Houser sells an average of 120 new cars and trucks a year, he said. The dealership moved into a new facility in 1976 and has tried to maintain its edge with facility upgrades since then. However, the recession has taken a toll on sales. Two employees lost their jobs in February.

Babe Houser, owner Ray Houser's father, started the dealership in 1966.

"This raises the community's awareness of how important these dealers are," Lamm said. "We donate, in goods and services, about $9,000 to causes and our local school district. We have probably some of the best jobs in Cloud County. Our people buy homes, appliances, clothing, food. Sadly, I think it's taking something of this magnitude to put into perspective how important dealers are."

"We are healthy, there's no doubt about it. And we expect to have many more years in the car business," Lamm said. "The uncertainty is with General Motors. That's the wild card."

Money said GM is making no secret of its desire to consolidate all of its brands within dealerships, versus having one or two lines at dealerships that also sell brands that compete against GM products.

But Money said his dealership has excelled by carrying Subaru, which makes the Forester, the best-selling all-wheel drive car in America. In April, Subaru announced its year-to-date sales were up 2 percent over 2008.

Friday, Salina's Bennett Autoplex vice president, Jeff Bennett, said he had received no communication from GM. The dealership learned Thursday it is losing its Jeep franchise.

At Holm Automotive in Abilene, the automated answering system plays the tag line "the only dealer in north-central Kansas that has four great GM lines under one roof."

No word had been received from GM Friday afternoon and owner Tim Holm described the atmosphere among employees as "anxious."

"It's a very uncomfortable situation to be in," Holm said.

He thinks cutting smaller, rural dealerships could cause GM to lose customers; people might be more likely to drive to bigger cities, where there are more brands to choose from.

Holm also challenged the amount GM would be saving by eliminating those dealer franchises.

"They send us the vehicle, and we pay for it immediately. We make our money when we retail it," Holm said. Dealers also front the money for any purchase incentives and they buy parts for their dealerships with cash, he said.

Holm said he talked with some Chrysler dealers, who said they were pushed by the company to take on extra vehicle inventory and parts, since that's where Chrysler makes its money. Yet those who are losing their franchises are finding out that the company doesn't plan to take those cars and parts back.

n Reporter David Clouston can be reached at 822-1403 or by e-mail at dclouston@salina.com.

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