GM won't renew Minden dealership at end of 2010

The Michael Hohl General Motors dealership in Carson City survived the cuts

announced by GM on Friday, but Michael Hohl Carson Valley Chevrolet in

Minden may not be so lucky.

Steve Conroy, operations manager for Michael Hohl Automotive Group, said

they were relieved to hear their Carson City dealership escaped the cuts.

Carson Valley Chevrolet, however, did receive notice that GM doesn't plan to

renew their dealership agreement at the end of 2010. Conroy explained that

this doesn't mean for certain that the dealership will close.

"We have a great relationship with GM, and we think we can appeal that and

get them to repeal that decision," Conroy said.

Hohl purchased the Minden dealership from Carson Valley Chevrolet in February 2007. That company purchased the dealership from the Hellwinkel family in 2003.

Until then, the C.O.D. Garage was one of the oldest operating commercial garages in the United States. The garage also holds the record for the oldest AAA touring service in Nevada and one of the oldest Chevrolet and Buick franchises in the United States.

It was founded by Clarence O. Dangberg in 1911.

Conroy also said that Scott Motors in Reno was also on the list of GM cuts,

which would leave Michael Hohl as the only Cadillac dealer in the region.

On Friday, GM told about 1,100 of its dealers " one in five " that they

would be dropped, adding to the economic pain radiating from the beleaguered

Detroit automakers to cities and towns across the country.

Including Chrysler's decision a day earlier to eliminate a quarter of its

own, about 1,900 dealerships " many pillars of their communities and heavy

advertisers for local media " learned in a matter of 48 hours that they

would be forced either to sell fewer brands or close altogether.

While GM doesn't own the dealers, the company says its network is too big,

causing dealers to compete with each other and giving shoppers too much

leverage to talk down prices and hurt future sales.

Several hundred of the GM dealers knew already they were headed for closure,

but most of them learned for the first time Friday. An industry group says

the GM and Chrysler cuts combined could wipe out 100,000 jobs.

Both GM and Chrysler are scrambling to reorganize and stay alive in a severe

recession that has pummeled car and truck sales for U.S. automakers, which

had already been losing market share to foreign companies for decades.

Chrysler LLC is already in bankruptcy protection, and industry analysts say

General Motors Corp. is making its cuts now in preparation for a bankruptcy

filing June 1. The company says it would prefer to restructure out of court.

GM declined to reveal which dealers will be eliminated. Many dealers vowed

to fight, first through a 30-day company appeal process, then possibly in

court.

GM's dealers are protected by state franchise laws, and the company concedes

it would be easier to cut them if it were operating under federal bankruptcy

protection. GM says it's trying to restructure outside of bankruptcy because

of the stigma of Chapter 11.

Chrysler dealers have fewer options because the company has already filed

for bankruptcy protection, and federal bankruptcy judges generally trump

state law. And Chrysler said on Thursday that its cuts were final.

GM outlined a plan to cut about 40 percent of its 6,000-dealer network by

the end of 2010 in hopes of getting the company back on its feet. Besides

the 1,110 dealership cuts, the company will shed about 500 dealerships that

market the Saturn, Hummer and Saab brands, which GM plans to phase out or

sell.

And when the surviving dealers' contracts are up in late 2010, GM will cut

still more by not offering renewals to about 10 percent of the dealers who

are left. Dealers could stay open selling used cars or other brands, but GM

and Chrysler cuts will still leave cities across the U.S. with empty

buildings, vacant lots and perhaps hundreds of thousands of dollars in lost

tax revenues.

FedEx letters bearing the bad news began arriving Friday morning at GM

franchises around the country. The letter states that dealers had been

judged on sales, customer service scores, location, condition of facilities

and other criteria.

While the targeted dealers represent about 20 percent of GM's total, they

make only 7 percent of its sales, the company said.

The cuts will allow the surviving dealers to expand the size of their

markets, so they have a better chance of staying healthy and attracting

private investment, said Mark LaNeve, GM's North American vice president of

sales and marketing.

"Over time, they just can't afford to invest in their business to the degree

the competition has," LaNeve said.

Toyota, for example, generally has larger and newer showrooms and service

departments than GM and Chrysler dealers ‹ making those dealerships more

attractive to potential buyers.

The Obama administration's auto task force, which is overseeing the GM and

Chrysler restructuring because both have received billions of dollars from

the government, was aware GM would cut dealers, LaNeve said. But he stressed

the company made the decision on how many and where.

Chrysler is aiming to close its nearly 800 dealers by June 9, and those

outlets may try deep discounts to clear out their remaining inventory. But

in the long run, prices for cars and trucks will probably rise for customers

as dealerships disappear.

"No longer will people be able to shop between three or four dealers within

15 minutes of each other for the best cutthroat price," said Aaron Bragman,

an automotive industry analyst with the consulting firm IHS Global Insight.

As GM and Chrysler lost market share to Japanese and other overseas brands,

they ended up with too many dealers. So did Ford Motor Co., which has

managed to stay healthier than either of its Detroit siblings.

In the 1980s, GM, Chrysler and Ford accounted for more than 75 percent of

U.S. sales, but that dropped to 48 percent last year. GM alone held nearly

51 percent of the market in 1962, but only 22 percent last year.