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Continued: 24 car dealers in Minnesota are back in business

  • Article by: SUZANNE ZIEGLER , Star Tribune
  • Last update: March 9, 2010 - 11:05 PM

Stillwater Motors was down to the last few Buicks on the lot.

But the third-generation General Motors dealership is looking to the future and ready to order -- and hire -- again after GM included it among the 661 dealerships nationwide that it has saved from the chopping block.

The dealership, which has been selling Buicks since 1922, was among the more than 2,000 across the country that GM had said would close as part of its government-backed bankruptcy restructuring to pare down stores and return to profitability.

"It's good news and a victory and we are excited," said general manager Michael Kahn. "It's good for the community, and a lot of customers were happy. Now I can see the glimmer in the employees' eyes. Everybody is excited."

In Minnesota, 20 of the 30 dealerships that were fighting GM via arbitration to stay in business have been reinstated, according to figures released Tuesday. Four others were previously saved from the chopping block.

The Minnesota Auto Dealers Association had estimated that 3,200 jobs in the state were in jeopardy as General Motors and Chrysler, also paring its network, shuttered dealerships. The state's new car dealerships accounted for $10 billion in revenue and nearly 19,000 jobs in 2008, the most recent year for which figures were available, according to the National Automobile Dealers Association.

Scott Lambert, executive vice president of the dealer group, now estimates 500 jobs in the state will be saved.

Though neither he nor GM is releasing names of the spared dealerships, Lambert notes they appear to be disproportionately in rural communities. "It's huge" for those towns, said Lambert. "These are jobs with health care benefits and good wages. They're the kinds of jobs you can raise a family on."

Whitaker Buick GMC in Forest Lake also made the cut. "We're still very excited," said owner Steve Whitaker. He said it will be a couple of weeks before he can start ordering new cars again -- shuttered dealerships have been unable to order new cars since June. "We're just glad to know we are going forward."

End of the battle for some

Scott Preusse is relieved the battle is over. "I went through a nightmare -- a bad dream for eight months," said the third-generation Redwood Falls, Minn., dealer. "It was the worst thing I have ever been through."

Preusse said the support from the Redwood Falls community has been overwhelming. "I've just been hearing from so many people in the last couple of days who have walked in, shook my hand and said congratulations."

As part of its restructuring, GM last year told 2,400 dealerships it would not renew their franchise agreements once they run out in October 2010. But the dealerships have said GM treated them unfairly, and Congress passed a law requiring an appeals process for the dealers.

GM's decision to keep the additional showrooms open effectively shrinks the number of appeals it has to contend with.

A second look at closings

Preusse speculated GM may have been "overwhelmed" at the number of dealers -- about 1,100 nationwide -- that filed for arbitration.

"I think they then took a second look and thought: 'We made some mistakes on some of these dealers,''' he said.

In Minnesota, GM, which still operates Chevrolet, GMC, Buick and Cadillac, originally targeted 36 dealerships for "complete termination," voiding all of its franchises. Of those, four were reinstated over the past nine months. Of the 32 remaining, 16 sought arbitration and six of those received calls in recent days that they're being reinstated, according to Lambert. Others will keep fighting in arbitration, but 13 are expected to close.

Lambert said 24 other stores were considered "partially terminated," meaning they could keep some GM brand franchises. Of those, 14 sought arbitration and all were reinstated. The other 10 will "live without" those brands, Lambert said.

Separately, Lambert said five Chrysler dealerships are seeking arbitration. In June, Chrysler terminated nearly 800 dealerships, including 18 in Minnesota.

Unsure why they're targeted

For the 10 dealerships that didn't get the call from GM, the anguish continues. Some have been in their communities for generations and their livelihoods are at stake. Making matters worse, they say they can't get answers about why they're being targeted to be shut down.

"How would you like to be fighting tooth and nail to get back what already belongs to you?" asked Karen Carlson, who owns Main Motors in Anoka with her husband, Lee. The dealership, which now sells Chevrolet and Cadillac, has been in their family for 90 years. "It has taken a complete toll financially. What was worth one thing one day is worth practically nothing the next day."

Their plight has made national airwaves. Their daughter, former Miss Minnesota and Miss America Gretchen Carlson, has talked about the closure on "Fox & Friends," where she works as an anchor.

Grossman Chevrolet Cadillac in Burnsville did not get the call. Owner Mike Grossman said he's barely hanging on but vows to fight for his dealership, which is just north of County Road 42. "This is costing me all I've worked for," said Grossman.

Rural Minnesota benefits

Paul Walser had his GM dealership in Bloomington reinstated months ago by GM. He noted that most of the dealerships targeted to close were in rural Minnesota, so reinstating many of those is logical. "My sense is that General Motors probably realized that by vacating a lot of these rural markets where there is no import presence, that they were basically handing the business to Ford," he said. "Because all of a sudden there is just one store left [in town] and it's your local Ford dealer. So I think they probably didn't like the fact that Ford outsold them."

The reinstated dealerships will be able to resume operations if they agree to terms of the letter they receive this week, which Lambert said his group will peruse carefully.

Preusse doesn't expect a deal breaker in the fine print: "I'm sure they're going to ask us to sell a few more cars for them. But that can only be expected. Everybody in the organization, from the dealers all the way to the upper management, has to do a little better job now to get that market share back that we had 20 years ago."

Staff writer Dee DePass and the Associated Press contributed to this report. Suzanne Ziegler • 612-673-1707

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