GM dealers safe from cuts?

Local car dealerships discuss potential changes after bankruptcy

By Kenneth Boone (Contact), | Alex City OutlookBrent Maze (Contact) | Alex City Outlook

Published Friday, June 5, 2009

Rumors about more General Motors closings in central Alabama are flying up and down Highway 280 this week. As of Friday, McKelvey Chevrolet in Dadeville said it has signed a contract to be a long-term GM dealer, while Bice Motor Co. and Darwin Dobbs Co. in Alexander City said they will remain GM dealers at least through October of 2010.

General Motors declared bankruptcy June 1 and notified about 3,600 dealers nationwide that would have new sales agreements, while another 1,350 dealerships were told they would lose their GM franchise. The newest wave of dealership cuts is in addition to the 1,100 dealerships that were cut in last month as part of the government’s restructuring of GM. Under the government plan, dealerships that remain with GM may be required to upgrade their facility.

McKelvey Chevrolet Corp. in Dadeville was notified by mail on Monday that it will be a part of the new General Motors.

Dealership co-owner Rush McKelvey said the letter he received from GM stated that McKelvey was a “key dealership for Chevrolet” and they would be dealer for the automobile company after it emerged from bankruptcy. Included with the letter was a new participation contract, which was signed and submitted back to GM Friday.

“It’s just great news for the area,” McKelvey said. “We’re tickled to continue being a GM dealership.”

Some of the reasons why the dealership, which has been selling GM vehicles since 1956, was chosen were due to its sales, service and customer service, McKelvey said.

“Business has been good over the last few months,” McKelvey said. “I believe the economy is beginning to turn around. We set a record this week for the number of hours we put in the service department. Our sales are up. We’ve had a great week.”

In the future, McKelvey believes GM must find a way to fix its business model after it comes out of bankruptcy.

“We’re going to have to work on getting our labor costs down,” McKelvey said. “If we’re going to come out from this, we’ve got to get competitive.”

Brian Bice, owner of Alexander City’s Bice Motors that sells GM’s Chevrolet brand, as well as Chrysler, Dodge and Jeep vehicles, said his company will be continue to be a Chevy dealer for now.

“We will be with Chevrolet though 2010,” he said. “I don’t know what’s going to happen after that because it could change.”

Bice said he doesn’t see the sense in the plan to cut back GM dealerships.

“There’s no rhyme or reason to cut the dealers, it’s not costing them a dime for the dealers to operate.”

Bice said as a Chevrolet dealer, he is required to buy automobiles, tools, software and other items from General Motors. Once a car is sold to a dealer, GM has made its money.

“We buy it from them at a non-negotiable price. The car is sold to the dealers as soon as it leaves the factory. The more dealers they have, the more cars they sell.”

Bice said that whether or not his company will sell Chevys after next year, Bice Motors intends to sell new and used cars as well as provide service for its customers for years to come.

“We have been approved to go forward with Chrysler, Dodge and Jeep with the new Chrysler Corporation,” he said. “We’re not going anywhere … there won’t be any layoffs or cutbacks. It will be business as usual.”

Alexander City’s 74-year-old Darwin Dobbs Co., sells Buick, Pontiac, GMC vehicles which are all manufactured by GM. Owner Fred Dobbs said Friday the GM turmoil will change his business, but he is not yet certain what changes will be made.

“It’s going to affect us, but we really don’t know the bottom line of it yet,” he said. “Nothing going to change with us anytime soon. We’re in business until 10/10.”

Dobbs, a vocal opponent of the government takeover of GM, said the government task force is trying to force the closure of 3,000 privately owned business that directly employ a quarter of a million Americans.

“What the ‘H’ happened to, ‘We’re going to save jobs and create jobs,’ from the (President Barack) Obama administration?” Dobbs said, “You can quote me on that.”

Dobbs echoed Bice’s thoughts on the restructuring plan to cut dealerships in order to strengthen GM.

“It’s a terribly dangerous misconception that the auto manufacturers own the dealerships,” he said. “They make money on us if we don’t even order a car from them.”

Dobbs said that in Alabama, 16 Chrysler dealerships and 50-60 GM dealerships will be cut in the government plan.

“I never thought I’d see GM or my dealership get between a rock and a hard place,” he said. “I’m profitable, and I didn’t have anything to do with it.”

He said that congressional hearings could affect the plans for GM franchise closures.

“Nothing set in stone yet, but they’ve got the hammer and chisel out,” Dobbs said. “You can bet your bippy I’ll fight it.”

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