GM dealers across the country are learning whether they'll stay open or not as part of the General Motors restructuring process. Tuesday, the automaker sent letters to 250 dealers nationwide that will lose their affiliation by October 2010. That's in addition to 1,124 GM dealers who learned the bad news last month.
So which dealers in Arkansas have gotten these letters? GM has made it clear that unlike Chrysler it's keeping the list of dealerships losing their affiliation confidential.
Of the two letters GM is sending out this week, Russell Chevrolet in Sherwood got the good one, the letter of participation. "We're a dealer that's going to be here tomorrow, a week from tomorrow, a year from tomorrow," said manager Bob Morris. "So we're doing business as usual."
But Dennis Jungmeyer with the Arkansas Automobile Dealers Association says between last month and Tuesday, an estimated 15 to 25 dealers got what's called a wind down letter. When their contracts with GM are up in October next year they're done.
Jungmeyer said, "We're looking at 2,000 families out of jobs in the state and those dealers are pillars in their communities." After June 12th they'll be able to do warranty work but they won't be able to buy new auto inventory.
Things won't be exactly the same for dealers that do stay in business. Those with Russell Chevrolet expect changes. For one, they'll be a lot busier because of less competition, which means they'll be able to hire people from dealerships that have been closed.
Mr. Jungmeyer also says the requirements to stay affiliated with the new GM violate Arkansas' business franchise act. For instance GM wouldn't allow their dealers to house any competing automaker under the same roof. Jungmeyer expects a lot of lawsuits. "What they're asking dealers to do is moving forward, if you want to be a partner with us, if you want to be a part of the new GM, then you're going to waive your rights under your state laws and I don't think any state will accept that," he said.
Jungmeyer says all GM dealers are under the gun. He says whether they got the letter of participation or the wind down letter they have until June 12th to agree to the terms. He sayd if they don't, their GM contract could be terminated immediately.
