Dealers wait for effects of GM bankruptcy

Despite the historic scope of General Motors’ June 1 bankruptcy filing, the impact at the dealership level is – at least for now – minimal.

While the auto manufacturer and the federal government announced the company will get up to another $30 billion from the government as it makes its way through a bankruptcy reorganization process, the New Hampshire dealers that employ hundreds selling and servicing GM vehicles are waiting to see what, if any, state laws will remain to protect them and their employees.

Peter McNamara, president of the New Hampshire Automobile Dealers Association, said that the company’s immediate plans indicate the state’s newly updated auto dealer’s bill of rights will continue to protect the state’s GM dealers.

The bill was designed to protect local dealers if manufacturers like GM decide to close dealerships. It requires that manufacturers, among other things, buy back some of the cars on a dealership’s lot, along with tools, and reimburse dealers for some building upgrades.

But federal bankruptcy protection trumps that law, so Chrysler dealerships were defenseless when the manufacturer announced last month that it would cull almost 800 dealerships nationwide, including six in New Hampshire.

But, McNamara said, for now GM dealers can still count on state law because GM doesn’t plan to close any dealerships during bankruptcy proceedings. The company still plans to wait until October 2010 to ax some 1,100 dealer contracts nationwide, he said.

“We’ll have to see over the next few weeks how that shakes out,” McNamara said.

But the decision to wait until late next year isn’t set in stone, he said. And the company has already announced plans to shut down Pontiac plants and to try to sell other brands, including Saturn, Saab and Hummer. “They may just close down those divisions altogether during bankruptcy,” McNamara said.

‘A lot needs to happen’

Developments in bankruptcy court also could push the company to shift its plans for the other 1,100 dealerships, he said.

Meanwhile, auto dealers will watch the bankruptcy proceedings, which are expected to take 60 to 90 days, closely.

Although dealers buy vehicles from the manufacturers and own their own buildings, signs and tools, they still depend on the company for warranty reimbursements and incentive payments for sales, McNamara said.

“They just want to make sure the manufacturer comes out of the bankruptcy still operating,” McNamara said. “A lot needs to happen in the next 60 to 90 days to make sure they’re still operating.”

Last month, GM announced it would slash its dealership roster by not renewing contracts with 1,100 dealers, including at least four in New Hampshire. AutoServ of Laconia in Belmont, and Poulin Auto Country, a Chevrolet dealer in Rochester, received notice, McNamara said, along with two other dealers that wish to remain anonymous. McNamara said he estimates at least two more dealers in the state received the same closing notice. – THE TELEGRAPH