General Motors dealerships in Colorado continue to sell cars despite Thursday’s bankruptcy filing by Chrysler and GM’s announcement days earlier that it will substantially decrease its dealership network.
Meanwhile, financial experts say GM’s own bankruptcy filing could be mere weeks away, further clouding the future of auto dealers nationally.
“Colorado new-car dealers have never believed that bankruptcy should be the path taken by Chrysler or other auto manufacturers,” said Tim Jackson, president of the Colorado Automobile Dealers Association, which represents about 270 new-car dealerships.
“Yet we are confident that Chrysler and its dealers will emerge stronger and more competitive as a result,” he said.
Nevertheless, GM is looking to cull the number of its dealerships from 7,400 to 3,405, aiming at underperformers. It also announced it will phase out the Pontiac brand in the next two years.
And the number of Chrysler dealers expected to be trimmed — 1,500 from a network of 3,200 — will be heavy too.
“There will be a noticeable reduction in the number of dealers going forward,” Chrysler vice chairman Jim Press told reporters Thursday on a conference call.
Dealers being dropped as “risky credits” will be identified by Chrysler or GMAC, according to a U.S. Treasury Department fact sheet on Chrysler’s bankruptcy.
What’s unclear is how it will change the landscape of GM dealerships here even as some estimates put the number of closures as high as 54 percent. Chrysler said it wants to pare its national number by 47 percent.
Colorado has about 100 dealerships that sell GM brands and about 44 that sell Chrysler, according to CADA.
Dealers remain upbeat.
“We’ve been through cycles before,” said Don Gerbaz, owner of Berthod Motors in Glenwood Springs. He carries GM brands Buick, Pontiac and GMC, Chrysler’s Jeep and other brands.
“You have your work cut out for you, and you know what you have to do, and you go out and control your controllables,” said Gerbaz, confident his store will remain in business.
Still, Jackson said the worst-case scenario could affect about half of the state’s GM dealerships.
But, he said, the formula is complex, and the state’s recent population growth could benefit dealers. The number of dealers in Colorado hasn’t kept up with the population.
“A lot of different factors play in,” Jackson said. “Colorado will probably not be as adversely impacted as other parts of the country” because there isn’t an overabundance of dealerships.
Chrysler’s Press said the company will pare its dealership count while in bankruptcy court, trying to eliminate outlets that don’t have all three of its brands — Chrysler, Dodge and Jeep — or are in weak financial positions.
GM dealers believe that the paring will occur naturally in some cases because of market conditions and dealers that combine, and by losing a slew of stores when the company dumps Saab, Hummer and Saturn either through sale or closure.
“They are not coming out and saying you have to close,” Gerbaz said. “They are trying other things that are a whole lot nicer.”
Some dealers believe culling the underperformers will have a positive impact on the ailing carmaker’s bottom line.
“I think General Motors will come out to be a much stronger company with a much stronger group of dealers,” said Kent Bozarth at Ed Bozarth Chevrolet.
Bloomberg News contributed to this report.
Elizabeth Aguilera: 303-954-1372 or eaguilera@denverpost.com
