A handful of Colorado’s General Motors dealers were notified Friday they are among 1,100 franchises the auto manufacturer plans to cut by late 2010.
Brett Hajek received the dreaded Federal Express package bearing the news at his family’s dealership, Hajek Chevrolet in Longmont.
“It was a shock to me that I would be included on their list,” he said. “My family has owned this business for 58 years. Considering the area I’m in and my sales volume and the steps we took to build a new building four years ago, it’s a shocker.”
General Motors is reducing its dealer network from 5,969 to 3,600 locations by the end of 2010, according to the automaker’s recent S-4 filing and updated viability plan.
GM’s announcement came a day after Chrysler cut 789 retail outlets, including 13 in Colorado. Chrysler set a closure date of June 9.
State’s numbers unknown
Because GM notified dealers privately, it is unclear how many of Colorado’s 92 GM outlets have been affected, said Tim Jackson, president of the Colorado Automobile Dealers Association.
He is aware of at least nine so far and expects the number of affected GM dealers in Colorado to be low, possibly lower than the 13 Chrysler agreements. In addition to Hajek, Victory Motors of Craig Inc., King Auto Center in Longmont and Burt Chevrolet in Parker are known to have received letters.
Victory Motors sells both Chrysler and GM products. It was spared Chrysler’s knife Thursday.
“The letter from General Motors was not a surprise,” said Steve Maneotis, who owns the dealership with his family.
Still, it was a blow.
“We continue to weigh our options,” he said. “As dealers, we don’t have too many cards left to hold.”
Dealerships usually have 60 to 80 employees, though it’s hard to say how employment will be affected, because many have more than one brand and will remain open.
GM’s planned closures are very different from Chrysler’s, experts say.
“The No. 1 difference is that Chrysler notified dealers they are being dropped, and GM notified dealers they are the list to be dropped but does not say they will be dropped,” said Dennis Virag, president of the Automotive Consulting Group in Ann Arbor, Mich.
The company won’t finalize its decision until June or July, allowing dealers to protest the decision. But if GM files for bankruptcy, even those contracts would be void.
The letter GM dealers received states the company reviewed sales effectiveness, sales volume, customer satisfaction, capitalization, profitability, location, facilities and other market factors.
Hajek and his father, Robert, already have begun collecting documents for their appeal. The 32-year-old says their sales and customers satisfaction are higher than competitors in the region
Hajek may also make a video showing GM executives his new $5 million lot and facilities.
“I’m not hanging my head yet,” he said. “It’s been in my family forever, and I plan on making it mine and my kids’.”
More time to plan
GM dealers who received notice are in a much better position than Chrysler outlets, Jackson said.
“They have a year and a half to plan their futures, versus the Chrysler dealers who have 26 days,” he said.
Chrysler offered no buy-back of inventory, while GM will be required to meet all requirements of terminating a contract, including buying back inventory. Most states also have franchise laws that auto dealers will rely on to make sure they are treated fairly barring a GM bankruptcy.
Dealers who did not receive letters saw no upside in the loss of friends and colleagues.
“Some car friends of mine did receive a letter, and it cuts me pretty deep,” said Steve Lidner of Cañon City’s Lidner Chevrolet Cadillac. “It reminds me of a cowboy getting shot out of the saddle.”
Elizabeth Aguilera: 303-954-1372 or eaguilera@denverpost.com
