Minnesota GM dealers anxiously await their fate

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After General Motors announced Monday that it will close 42 percent of its 6,200 dealerships by the end of next year, dealers in Minnesota and elsewhere are anxiously awaiting news about whether their businesses will survive.

GM is taking a number of steps to meet the federal government's June 1st deadline to strengthen its balance sheet or file for bankruptcy. The company is currently surviving on about $15 billion in government loans.

As part of its restructuring plan, GM is slicing jobs, abandoning or selling off brands, and shuttering dealerships. The company says most of the dealer shutdowns will hit metropolitan areas. GM will contact the targeted dealers next month.

Scott Lambert of the Minnesota Automobile Dealers Association guesses that as many as 50 of Minnesota's nearly 140 GM dealerships could be on the chopping block. And about 2,000 jobs could disappear.

Lambert suspects that the speed at which GM plans to close dealerships signals an impending bankruptcy.

"I don't think they could do that outside of bankruptcy," he said. "I think it would be very difficult to reduce the dealer count that dramatically that fast."

But Pete Ternes, a GM spokesman, says the company would prefer to avoid bankruptcy. He said it's too soon to tell how many dealerships may close, and that the scale of the closings will vary by market.

Ternes says GM expects to shed about 550 dealerships nationally through the sale or discontinuation of its Saab, Hummer, Saturn and Pontiac brands. After that, GM would target underperforming stores. The automaker has long been criticized for having too many dealerships.

Steve Whitaker, owner of Whitaker Buick-Pontiac-GMC in Forest Lake, says he's hoping he's far enough outside the metro area to avoid the ax that will likely strike dealers closer in.

"GM builds very good cars and in our own sense and our place in the world, we plan on being a survivor, and we hope to thrive as GM comes out of this restructuring," he said.

Whitaker says his profits have been holding steady at a time of major losses in the industry. He will be affected by GM's discontinuation of the Pontiac brand, which he laments. But he says he saw this move coming, and it won't crimp his business too much. Pontiac is not his biggest brand.

"We sell more used ones than new ones, which is kind of where the market is on everything," he said.

Whitaker says he'd want to replace that lost Pontiac business with his other vehicle lines -- Buick, GMC, and used cars. He thinks he can do that and avoid laying off sales staff.

But Whitaker says a GM bankruptcy probably would affect him -- it could drag out GM's already slow payments for things like warranties.

As for the GM dealerships that will get closed, Lambert of the Minnesota Automobile Dealers Association says everyone will be better off getting the news sooner rather than later.

"Because lingering on through the fall and winter again with people unsure about their jobs and businesses is terrible for the entire business."