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Modern Auto Did Not Receive Closure Letter
By Susan Miller, Missourian Staff Writer
05/19/2009
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Celebrating its 90th year in business, Modern Auto in Washington said it plans to be around for at least another 90 years.

John Feltmann, co-owner and service director, said the family-owned dealership did not receive a closure letter Friday from GM and it's business as usual.

"We didn't get a letter. We're in good shape," said Feltmann.

The Missourian attempted to contact other GM dealerships in the area, including Jim Trenary in Union, Johnny Londoff in Pacific and West Brothers in Sullivan, but did not hear back from them by press time.

General Motors on Friday told about 1,100 of its dealers - one in five - that they would be dropped by late next year.
The GM dealerships will be eliminated when their contracts end late next year.

Several hundred of the GM dealers knew already they were headed for closure, but most of them learned for the first time Friday. The National Automobile Dealers Association, an industry group, says the GM and Chrysler cuts combined could wipe out 100,000 jobs.

While GM doesn't own the dealerships, the company says its network is too big, causing dealers to compete with each other and giving shoppers too much leverage to talk down prices and hurt future sales.

Both GM and Chrysler are scrambling to reorganize and stay alive in a severe recession that has pummeled car and truck sales for U.S. automakers, which had already been losing market share to foreign companies for decades.

Chrysler LLC is already in bankruptcy protection, and industry analysts say General Motors Corp. is making its cuts now in preparation for a bankruptcy filing June 1. The company says it would prefer to restructure out of court.

GM declined to reveal which dealers will be eliminated. Many dealers vowed to fight, first through a 30-day company appeal process, then possibly in court.

GM's dealers are protected by state franchise laws, and the company concedes it would be easier to cut them if it were operating under federal bankruptcy protection. GM says it's trying to restructure outside of bankruptcy because of the stigma of bankruptcy.

Chrysler dealers have fewer options because the company has already filed for bankruptcy protection, and federal bankruptcy judges generally trump state law. And Chrysler said on Thursday that its cuts were final.

GM outlined a plan to cut about 40 percent of its 6,000-dealer network by the end of 2010 in hopes of getting the company back on its feet. Besides the 1,110 dealership cuts, the company will shed about 500 dealerships that market the Saturn, Hummer and Saab brands, which GM plans to phase out or sell.

And when the surviving dealers' contracts are up in late 2010, GM will cut still more by not offering renewals to about 10 percent of the dealers who are left. Dealers could stay open selling used cars or other brands, but GM and Chrysler cuts will still leave cities across the United States with empty buildings, vacant lots and perhaps hundreds of thousands of dollars in lost tax revenues.

Some of the information for this story was obtained from the Associated Press.


©Washington Missouri 2010

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