Minnesota car dealers go to D.C. to make their plea

  • Article by: KEVIN DIAZ , Star Tribune
  • Updated: June 3, 2009 - 11:22 PM

Minnesota car dealers told lawmakers about losing their livelihoods - and more.

WASHINGTON - Shakopee Chevrolet owner George McGuire was getting psyched for the sales job of his life.

"What's at stake here," he said Wednesday on his way to meet with Sen. Amy Klobuchar, D-Minn., "is I'll be wiped out."

It's pretty much the same story for nearly 50 other Minnesota car dealers facing termination, either by Chrysler or General Motors, both of which are under various forms of government control. Entire livelihoods, careers and life savings are on the line.

The dealers came to make their pitch as lawmakers took up the issue on Capitol Hill Wednesday in an hours-long hearing before the Senate Commerce Committee. Auto executives said they had no choice, and dealers from around the county said they had nowhere else to turn for relief.

"It's surreal," said Tom Leonard, co-owner of Fury Dodge Chrysler in Lake Elmo. "We have no other leverage, no other say, no day in court. This is our only voice."

Leonard, along with his brother Jim, brought Klobuchar and other members of the Minnesota delegation 1,200 letters, many of them from customers and community leaders concerned about their local car dealership - which represents an iconic Main Street business.

"It used to be, if you had a problem, you went to Detroit," said Scott Preusse, a third-generation GM and Chrysler dealer in Redwood Falls, Minn. "Now you come to Washington."

Preusse, like McGuire and most of the other dealers in this newly minted band of lobbyists, had never been to Washington before, not even to sightsee. The dealers snapped pictures of the Capitol, got lost in the maze of underground tunnels, and took wrong turns in the endless marble corridors.

But they are car salesmen. "It's all about sales," said their guide, Scott Lambert, a former congressional aide and now the executive vice president of the Minnesota Auto Dealers Association. "These are Main Street Minnesota businessmen who take care of the local baseball teams, the bean feeds, and all that stuff."

Sympathetic ears

Most importantly, the dealers do not represent the Big Three automakers, and that's their core message. They had no trouble lining up sympathetic hearings across the spectrum of Minnesota lawmakers, from liberal Democrat Keith Ellison to conservative Republican John Kline.

Ellison, the car dealers' first appointment of the day, said he is outraged that big auto companies getting taxpayer dollars are shutting down locally owned franchises. "They should be flowing with benevolence and doing everything they can to keep these people afloat," said Ellison, a Detroit native.

The government's majority stake in the bankrupt GM is part of every conversation about cars in Washington. Were it not for that, the dealers said they wouldn't be asking free-market champions like Kline for help.

But as it is, Kline notes, there's a car dealership in just about every congressional district in America, resulting in the inevitable suspicion that politics, rather than pure economics, is dictating which dealers die and which ones live.

Fueling that suspicion is the fact that a "store" like McGuire's Shakopee Chevrolet, which is in Kline's district, has seen a 30-40 percent uptick in business this year. "The frustration is that they're running profitable businesses, and they're being ordered to close," Kline said.

2,000 U.S. dealerships closing

In all, some 2,000 dealerships are being closed throughout America, putting 100,000 jobs at risk, including 3,000 in Minnesota. Some additional Minnesota dealerships were notified of termination this week, though some dealers expect only five or six additions to the list.

"It's a national tragedy," said Sen. Jay Rockefeller, D-W.Va., who presided over the Commerce Committee hearing. Wednesday.

With Chrysler going out of bankruptcy, GM going in, and a government task force overseeing both, dealers like McGuire say they don't know why they were picked for termination, or who picked them.

"It's so un-American," said McGuire, a married father of three. "Effectively, the government controls GM, so we're asking the government to allow free enterprise to take place. We're not asking for a bailout. But nobody should choose you to fail."

The termination letters, which started arriving last month, were unsigned. "It doesn't get any more faceless," said Doug Hawkinson, general manager at Koronis Motors in Paynesville, Minn.

Hawkinson, McGuire and the other Minnesota car salesmen sat among dozens of other terminated dealers from around the country listening to the nation's top auto chiefs tell Rockefeller's committee about their reorganization plans.

In part, the dealers' fears stem from the Obama administration's takeover of GM.

"I don't believe the manufacturers are in charge," said Tom Leonard. "I think the government is in charge."

But both auto chieftains, Chrysler President James Press and GM chief executive Fritz Henderson, testified that the reorganization plans and dealer cuts are of their own making.

Press called the decision "gut wrenching," but "an absolutely necessary part of our effort to assure the long-term viability of the new Chrysler Group," which will be run by the Italian auto giant Fiat.

He suggested that "overlapping" dealers tend to drive down profits because it adds distribution and marketing costs and they need to streamline operations.

As for deciding which dealerships should close, the executives said they are basing their decisions on the sales potential in different markets and not just the dealers' track records.

McGuire disputes the automakers' contention that the current dealer network is not competitive. McGuire doesn't see himself as a drag on an industry he's been in for 19 years. His dealership and its 40 employees cost the automakers nothing, he said. He's selling record numbers of cars, he's well capitalized, and customers are still coming through the doors.

Staff writer Dee DePass contributed to this report. Kevin Diaz • 202-408-2753

  • related content

  • GM, Chrysler say slashing dealerships necessary

    Wednesday June 3, 2009

    Partners no more, bankrupt automakers and small-town car dealers who are being stripped of their livelihood brought the anguish of their sinking fortunes into the halls of Congress on Wednesday...

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close