Business

Final score: 28 franchise dealers reprieved, 24 shut

That's how many had Minnesota dealerships reinstated after Chrysler and GM bankruptcies threatened 52.

By David Phelps

July 9, 2010 at 2:27AM

Co-owner Jim Leonard at his dealership last year after theclosings announcement. Lake Elmo Chrysler filed for arbitration and recently won its case to be reinstated. (Star Tribune/The Minnesota Star Tribune)

When Shakopee Chevrolet announced its new agreement with General Motors late last week, the 52-year-old dealership became the most recent car store in Minnesota to defy the bankruptcy-driven round of closings that were announced last year.

"It's wonderful," general manager and part owner George McGuire said on Thursday. "It's great for employees, it's great for my town, it's great for me and my family and it's great for GM."

McGuire said he's fought a long, expensive battle since GM declared it would end relations with many dealers last year.

"There was no darker moment than when it was announced. But each day since it got a little brighter," said McGuire.

All told, 28 dealers had their dealerships reinstated after the bankruptcies of GM and Chrysler threatened the franchises of 52 Minnesota operations, according to a final tally by the Minnesota Automobile Dealers Association (MADA) that was released Thursday. The new lease on life for these dealerships saved 1,700 jobs, MADA said.

On the flip side, however, 24 dealerships throughout the state closed at the expense of about 1,400 jobs, MADA calculated.

Other dealers that lost their primary Chrysler and GM relationships were able to stay in business selling used cars or they hooked up with another franchise, the trade association said.

"It was high drama and very scary for a lot of people," said Scott Lambert, executive vice president of MADA.

Lambert credited an arbitration system set up by Congress for terminated dealerships as critical to saving some of those businesses.

"I have to give credit to the entire Minnesota congressional delegation," Lambert said. "They worked hard to save as many jobs as possible and unanimously supported the independent arbitration plan that dealers asked for. Congress did this when they couldn't get answers from the automakers about why they were terminating profitable dealerships."

Lambert said 36 Chrysler and GM dealerships in Minnesota filed for arbitration. Most settled with the two automakers without actually going to arbitration. Two dealerships that went through the process, Lake Elmo Chrysler and Shakopee Chevrolet, won their cases, both within the last month.

Lambert, who was an expert witness in the Shakopee Chevrolet case, said the legal battle between dealer and manufacturer was intense.

"They [the manufacturers] were in it to win," Lambert said. "You [dealers] had to put on a case just as if you were going to trial."

McGuire said his dealership survived the year in limbo with GM by purchasing new Chevrolets from other dealers to put on his lot and through the performance of his service department.

"They were the backbone," McGuire said of the mechanics and others who worked in service.

"No employees left. It was very humbling," he said. "I'm blessed."

David Phelps • 612-673-7269

Steve Whitaker, of Whitaker Buick GMC in Forest Lake, got a call in March from a GM official telling him that his was one of the first dealerships nationally to be reinstated. (Star Tribune/The Minnesota Star Tribune)

Scott Preusse, Scott Lambert of the Minnesota Automobile Dealers Association and George McGuire helped work to save dealerships. “It was high drama and very scary,” Lambert said. (McClatchy Tribune/The Minnesota Star Tribune)