GM spares Q-C dealerships

"We"re good. Everybody"s celebrating and happy," she said, describing how she shared the news over the intercom to the applause of employees of her Green Chevrolet Chrysler dealership. "But we feel bad for the guys that are going to close."

Across the nation, GM dealers of all sizes awaited some kind of notification Friday as the automaker told about 1,100 dealers that they would be dropped by late next year.

Unlike with Chrysler, which a day earlier had publicly released a list of dealerships it intends to close ahead of a bankruptcy court filing, GM declined to reveal tbe dealers with which it will cut ties. But all of the area dealers who responded to the Quad-City Times indicated they are keeping their GM franchise.

"Anybody that received a letter is probably not going to say whether or not they received one because it is a private document between GM and that dealership," said Tom Pospisil, the president of Lujack"s NorthPark Auto Plaza, Davenport. "I have not received anything that indicates we need to worry.

"But there"s a lot of employees who will be affected by those stores closing," he said of the national situation.

In addition to the 1,100 dealers cut Friday by GM, Chrysler"s announcement Thursday will eliminate 1,900 dealerships -- or a quarter of Chrysler"s dealers -- from its rolls. Industry leaders estimate the cuts could mean the loss of 100,000 jobs in all.

While GM dealers who will lose their franchises received letters delivered by FedEx, dealers not affected either received calls assuring them they were fine or heard nothing -- and presumed they were not on the list.

John McEleney, the owner of McEleney Auto Center in Clinton, Iowa, and McEleney Autoplex in Iowa City, said he got a call from GM telling him "don"t worry, you don"t have any problems."

"I guess you never take anything for granted," he said. "I thought we were in pretty good shape, but I breathed a sigh of relief."

There also was no FedEx letter delivery to John Keady"s GM Superstore, as founder and owner John Keady had predicted earlier this week. Still, he said, "It"s a horribly nervous time for dealers around the country."

According to Keady, GM was targeting the larger metro areas such as Chicago, Houston and Atlanta "where they have too many dealers selling the same brand." Also targeted were dealerships with poor customer satisfaction and sales performance as well as stores in less visible locations and in need of updating.

"They"re targeting those with non-GM brands on the same real estate," he said.

Mark Stueland, who owns Stueland Auto Center in Tipton, Iowa, with his brother, Paul, said they heard nothing Friday.

"We feel good about our situation. We had a scare, though, when the FedEx truck pulled up," he said, adding that the delivery was a package from GM with OnStar materials.

"We feel confident we"ve done what we need to do," he said. "Unfortunately, it"s in the government"s hands and that"s what makes us so upset."

Gary Thomas, president of the Iowa Automobile Dealers Association, said he had only heard from seven or eight Iowa dealers who did receive letters from GM on Friday. He said affected dealerships were in southern and western Iowa -- none in eastern Iowa. "I don"t know how many in Iowa got the letter. The only way the association will know is when the dealers call and say 'Now what? What are my rights?" "

He said Iowa"s franchise laws will not let GM terminate stores. "But GM is saying it is not a letter of termination, it is a letter of expectation."

Thomas had not seen a letter but expected they focused on "not meeting expectations or having a substandard facility or being undercapitalized."

"The tough part in Iowa is you have a lot of second, third and fourth generation dealers and after 40, 50 or 60 years with GM you get a letter that says you"re not viable. I think that"s a terrible way to do business," he said.

That is why Thomas and others have been lobbying this week in Washington, D.C., with President Barack Obama"s auto task force to urge it to slow down the process.

Thomas said Iowa auto dealerships employ about 12,000 people directly.

McEleney, who is president of the National Automobile Dealers Association, has been part of the same lobbying effort in Washington. He agreed that the market should decide which dealers stay and which go. "Dealerships don"t cost (automakers) anything. We are independent business people. When a vehicle is built and leaves the assembly plant, we pay for it that day... The truth is if there are fewer dealers, it doesn"t save them a penny."

Thomas agreed. "The manufacturers have one customer -- that"s the dealer. And the dealer has a whole host of customers," he said, adding that the risk falls on the dealer, who owns the real estate, cars and parts and pays the other expenses including the employees" salaries and benefits.

"I don"t think the government has spent enough time studying that relationship (between the dealer and the manufacturer)," Pospisil said.