Automakers terminate contracts with GMC, Norman-Blackmon
Published 5:43 pm Friday, May 15, 2009
One day after Greenville Motor Company received a letter from Chrysler stating it was terminating the dealer’s franchise agreement, Norman-Blackmon Motor Company received a letter from General Motors stating the same.
Chrysler filed for Chapter 11 bankruptcy protection on April 30 and industry experts fear GM could be headed down the same path, despite severing relationships with 1,100 dealers on Friday, including Norman-Blackmon.
The GM letter outlines, among other things, the company’s plan to restructure its operations as ordered by the federal government and states that a “contractual relationship” will not exist with Norman-Blackmon “past October 2010.” Letters were sent by Federal Express and arrived on Friday morning at most of the dealerships targeted by GM.
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Owner Todd Norman said customers should expect to see a reduction in the number of GM automobiles sold on the lot because of the 16-month window in which the dealership has to work with.
“I can still order cars…if someone wanted one tomorrow, I could get it for them,” he said. “But will I spend money just to order from GM? Probably not.”
Norman said he was frustrated with GM’s business decisions and pointed to a comment made to reporters by Mark LaNeve, GM’s vice-president of North American sales and marketing. LaNeve said: “Dealers are not a problem to GM; they’re an asset to GM. Too many dealers, in actuality, are a problem.”
“He (LaNeve) just contradicts himself in the same statement,” said Norman. “If the dealers are so important, why are they cutting over 1,000 of them?”
In the short-term, Norman said the longtime Greenville automobile dealership would to continue to operate as usual.
“We’re just going to keep on, keeping on,” he said. “But barring some change in their plans, we will no longer be a GM franchise on October 2010. We have a good service department, good people, and we may end up moving more into the used car business. Right now, we just don’t know.”
Greenville Motor Company will no longer sell Chryslers because the automaker is seeking to reject franchise agreements with 789 dealerships across the U.S., including Greenville Motor and 12 other dealers in Alabama, as part of the company’s attempts to reorganize and possibly emerge from bankruptcy.
Ken Gibson, General Manager of Greenville Motor Company, said he was “extremely disappointed” by Chrysler’s actions. He said the Automobile Dealers Association of Alabama is discussing with its legal team on whether or not to appeal the decision. The U.S. Bankruptcy Court in New York will decide whether or not to approve Chrysler’s motion on June 3.
“The unfair thing is that when they (Chrysler) terminate this agreement, they don’t have to buy back your surplus inventory and essential tools used by your service department,” said Gibson. “We’ve made a big investment with Chrysler, from computer systems and tools to do warranty work, and you can imagine in 25 years how many parts we’ve built up for Chrysler automobiles. We’re talking about thousands of dollars.”
Gibson said there are currently 10 Chrysler vehicles on the Greenville Motor Company lot.
“We used to have 125 new cars, but we made the decision a few months ago to try and get it down to below 50 cars,” he said. “We’re going to be offering really good deals on Chryslers, at or below cost, in order to liquidate our remaining inventory.”
But Gibson said the company remains strong and committed.
“We’ve got good employees and people who’ve been with us for a long time,” he said. “And we’ve got loyal customers. We’re going to be fine.”
Greenville Motor Company has operated in Greenville since 2000 and was moved here from Fort Deposit by the late Charles Haigler Jr., someone who would have also been disappointed in Chrysler’s decision, said Gibson. Haigler Jr. died in 2005.
“They thing about ‘Mr. Charlie’ was loyalty,” said Gibson. “He thought of us as being partners with Chrysler. But where’s the partnership now?”