Dealer to lose Cadillac franchise

Posted June 04, 2009, at 7:56 p.m.
Last modified Jan. 30, 2011, at 11:47 a.m.

Kirk Carroll doesn’t like the idea of no longer selling Cadillacs, but he does appreciate how General Motors Corp. is handling the closure of about 1,100 dealerships nationwide.

The 47-year-old owner of Carroll’s Auto Sales of Presque Isle is among 200 dealers across the country who received a “wind down” letter from GM on Monday. Carroll’s letter informed him that his franchise agreement to sell Cadillacs would end late next year, he said.

Given that he will continue to sell Buicks, Chevrolets and GMC trucks at his 80-vehicle lot — and has sold only a handful of Cadillacs annually — Carroll called the proposed agreement “a soft landing.”

“They have really thought this through very well ahead of time in helping not to interrupt a dealer’s operations or a customer’s service and warranty needs,” Carroll said Thursday. “They are also giving us some money. Dealerships that are [losing some or all of their franchises] are getting anywhere from $20,000 to $1 million.

“They are parting [with dealers] in a very professional manner, I think,” he added. “I think it was a very good move for GM and it’s a very positive thing.”

Not that other dealers losing franchise deals would agree, Carroll said.

“If you are one of those guys losing his dealership, there’s nowhere near enough money to compensate for the loss,” he said.

More than 15 GM and Chrysler dealerships in Maine are targeted for closing due to the bankruptcy of the two U.S. automakers, according to U.S. Sen. Olympia J. Snowe, R-Maine.

Chrysler has identified 789 dealerships nationwide that it plans to close next Tuesday, about a quarter of the company’s dealership network. Dealers received only three weeks’ notice.

GM told 1,100 dealerships it does not plan to renew their franchise agreements in late 2010 and expects to shed an additional 900 dealerships through attrition and by selling or discontinuing its Hummer, Pontiac, Saab and Saturn brands.

Unlike Chrysler, which has released a list of the dealerships it plans to eliminate, GM declined to reveal which of its dealers will be affected.

Four Chrysler dealerships in Maine — located in Rockland, Brunswick, Sanford and Livermore Falls — have been targeted.

GM has 47 licensed new car dealerships in Maine. Its handling of the closings, and the unclear criteria by which it selected who closes, has led to widespread criticism, as has Chrysler’s abrupt June 9 closures.

“The American taxpayer has provided $70 billion to assist these companies — we deserve answers and the dealers deserve far better,” Snowe said Wednesday at a hearing of the Senate Commerce Committee, of which she is a member.

At the hearing, GM President Fritz Henderson and Chrysler President James Press said there are too many dealers, with many representing the same company often competing with each other for sales. Many dealerships date to the 1940s and 1950s, when motorists lived farther apart and Detroit automakers led the world in sales, they said.

After hemorrhaging customers for decades and losing market share to foreign competitors, the two automakers said their companies need to scale back their operations to become leaner and return to profitability.

Henderson told the committee that 500 dealers had appealed GM’s decision to sever ties. GM has reversed itself on 11 of them, he said.

John McEleney, chairman of the National Automobile Dealers Association, has expressed concern about GM’s plan to require all of its surviving dealers to sign what he called a one-sided, open-ended operating agreement as a condition for remaining a GM dealer.

“If I sign it, I will be committing my business to spend hundreds of thousands of dollars that I know about today, and committing to millions of dollars of potential financial obligations in the future,” McEleney said in a statement.

Carroll said he believes that the surviving dealerships would likely be substantially improved, probably with some help from GM, including their taking on greater vehicle inventories and, possibly, getting funds for building improvements, he said.

The Associated Press contributed to this report.

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