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Posted April 30, 2009 | Copyright © The Northern Virginia Daily
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GM dealers here await decision on who will survive
Winchester Saturn business acquires local Mazda, Subaru franchise rights
By James Heffernan — email@example.com
General Motors may be racing ahead with its restructuring plans, but local GM dealers are stuck in neutral.
Just this week the company announced it is dumping the Pontiac brand and moving up the end of production of Saturns and Hummers to this year, along with closing between 1,000 and 1,200 dealerships nationwide.
“We’re all a little discouraged, but I don’t know that we’re really shocked,” said Jim Stutzman, of Stutzman Chevrolet-Cadillac-Buick in Winchester. “It’s a new generation of the company. They want to be a lean, viable competitor in the global marketplace.”
To do that, GM and its new CEO, Fritz Henderson, are having to slash costs at nearly every turn, from labor to brands to buildings. The company has even offered the federal government majority ownership to stave off bankruptcy.
“While none of us want to see something like this happen to a company that has been a bellwether for this country for more than 50 years, it’s a fact that we have to get ourselves positioned on the same level playing field from a cost structure standpoint that [foreign automakers] are, even here in the U.S.,” Stutzman said.
Over the next 30 days, GM officials will meet with dealers that have been identified as underperforming in the area of sales or customer service, or are in a region served by other GM retailers.
“It’s no different than any other industry. It will be a survival of the fittest,” Stutzman said.
Two GM dealerships in the Harrisonburg area have already thrown in the towel. Charlie O’Baugh Pontiac-Buick-GMC on South Main Street and Dick Meyers Chevrolet-Pontiac in Elkton have said they will shut down at the end of April.
Stutzman said with a strong customer base, a busy service department and three of the four core brands that GM has chosen to keep, he hopes his dealership is well positioned to survive.
“The doors were unlocked this morning and it’s business as usual. But in this market environment, there are certainly no guarantees,” he said. “People don’t want to spend $30,000, $40,000, $50,000 on an automobile when they don’t know if the dealership will be there in a few months.”
GM has said the Pontiac brand will be phased out by the end of 2010.
Dick Kern, of Kern Motor Co., a Pontiac, Jeep and GMC dealer in Winchester, said the loss of Pontiac will hurt, as the brand accounted for 25 percent of its new car sales in the first quarter.
But the dealership, which opened in 1946, has been down this road before, he said.
“We started with Kaiser-Frasier. They went out of business. Then we had Studebaker and Hudson, and they went out of business. Then we had Edsel, and we all know what happened to them.”
Kern Motors’ primary concern at this point is “taking care of our customers,” he said, adding that the company will continue to service all the Pontiac, Jeep and GMC models it sells.
Meanwhile, Saturn of Winchester has taken steps to ensure its survival. The dealership acquired the local Mazda and Subaru franchise rights from Winchester Ford earlier this month.
General manager Bobby Williams said the ownership team began shopping for other franchises back in December, when GM first announced that Saturn was not a part of its future product portfolio.
Saturn of Winchester initially picked up about 50 Mazda and Subaru vehicles from Winchester Ford and has since added more inventory.
Williams said the additions have been good for business.
“We weren’t exactly at death’s door,” he said, “but acquiring these two dealers has been a boost, and it’s given us some hope for the future. We’re seeing the glass as half-full.”
Plus, there is a strong possibility that Saturn may be spun off from GM and picked up by another manufacturer, Williams said.
There are currently three suitors for the company, including the private equity group Black Oak Partners, which has approached GM about operating Saturn as an automobile distributor and retailer, offering smaller, fuel-efficient vehicles from a range of manufacturers.
“Our intention is to carry the Saturn brand as long as it is still available,” Williams said.
Stutzman said once GM’s restructuring plan is in place and the economy begins to recover, it should inspire consumers to take a second look at American-made automobiles.
“Maybe it’s time to start supporting our own at home,” he said.
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