published Tuesday, March 16th, 2010

Local GM dealers face franchise fight

WHAT IS ARBITRATION

Of the roughly 2,000 dealerships nationwide which were told their franchise agreements would not be renewed as part of GM's bankruptcy proceedings, about 1,100 filed for arbitration on or before Jan. 25, 2010. Of the 1,100 dealers who sought arbitration, GM sent letters to 661 dealers on March 11 allowing them to retain their franchise.

Dealers who did not receive a letter of intent have the option to either accept a wind-down settlement from GM, which will let the franchise expire on Oct. 31, or pursue arbitration with the carmaker to negotiate.

Arbitration must be completed by June 14.

Source: General Motors

None of the three Chattanooga-area auto dealerships whose franchise agreements were left unrenewed by GM has received a response to their appeal, dealers said Monday.

GM said on March 5 that 661 of the 1,100 dealers who filed for arbitration in response to their nonrenewal would receive letters of intent in the mail, allowing them to retain their franchise. The letters were mailed on March 11, the company said.

"All I can tell you is that we're still basically in limbo," said Tim Kelly, owner of Kelly Auto Group. "We're pursuing arbitration, and we've got some things that have been proposed, but until the other shoe drops, we won't know what's happening."

Mr. Kelly said he has no plans to lay off employees until he settles the matter with GM. His dealership sells Cadillac and GMC from GM. He also sells Saab, Mitsubishi, Subaru, Infiniti and Hummer brands.

Herb Adcox of Herb Adcox Chevrolet and Debbie Ledford Melton of Don Ledford Automotive in Cleveland, Tenn., have also avoided laying off employees thus far, they say, and have no plans to do so.

Ryndee Carney, spokeswoman for GM, said that if dealers were going to be reinstated, they would know by now.

  • photo
    FILE - General Motors Co. said Friday, March 5, 2010, it will reinstate about 600 dealerships that were slated to be cut from the automaker's network.(AP Photo/Lisa Poole, file)

"We called all of the dealers who will be receiving letters by close of business on Monday the 8th, so anybody who was going to get a letter was telephoned," she said. "Their option is now to either reach a settlement with us, which we hope they would do, or pursue arbitration."

Herb Adcox of Herb Adcox Chevrolet said that while GM originally took a hard line with dealers during the carmaker's bankruptcy, public outcry, congressional mandates and new management have begun to soften the company's stance.

"I think (GM management) found out the old GM acted in haste, and did some things to get out of that bankruptcy as quick as they could that they shouldn't have, and I think the new GM has had a chance to look at it and say, 'Well, we've canceled a lot of dealers that we shouldn't have,'" Mr. Adcox said.

In the meantime, cars remain in short supply as a result of what some dealers say is GM's decision to keep production levels low for those whose franchises are in limbo.

"Right now, every dealer I talk to is complaining about not being able to get the proper mix of cars to their dealership to make a profit," Mr. Adcox said.

Mr. Kelly agreed, saying that although he has been unable to get cars directly from GM, he's been able to restock by going through brokers and other dealers.

Despite the difficulties of low inventory, a legal battle and an uncertain future, Mr. Adcox said he isn't going anywhere. He added that even if GM denies his petition to stay on under GM, he's prepared to go into business under another brand.

"Some of the dealers have gone into used cars, and you have imports that are open for dealers," said Mr. Adcox. "I'd say a former Chevrolet dealer would be an ideal candidate for an import franchise."

Debbie Ledford Melton, general manager for Don Ledford Automotive, said that while she too has heard nothing from GM regarding the franchise status of her dealership, she remains hopeful.

"I don't think anybody's as eager as I am to get this resolved," she said. "I'm very optimistic that we will be getting our franchise back."

Spokesmen for the dealerships were reluctant to reveal details of their negotiations with GM under trms of nondisclosure agreements signed with the automaker as a condition of the arbitration process.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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Comments do not represent the opinions of the Chattanooga Times Free Press, nor does it review every comment. Profanities, slurs and libelous remarks are prohibited. For more information you can view our Terms & Conditions and/or Ethics policy.
MetroMax said...

Adcox, Kelly, and Ledford (combined) have been in business for well over 100 years. They all run successful organizations or they would have gone out of business a long time ago. Love them or hate them, they cannot stay in business without customers. It’s just basic business.

GM should leave it up to the local consumer to decide their fate. Either the community does business with them or they don’t. It’s that simple!

Best of luck to you all in the arbitration process; you should not be fighting for what is rightfully yours.

March 16, 2010 at 11:27 a.m.
rolando said...

Of the three without a dealership renewal, how many contributed heavily to our current president during his campaign? Word has it that none of them contributed more than a few hundred. That...that man in the WH is a petulant child who takes revenge against those who did not support him during his campaign. He did it during and after the bankruptcy of "his" company and is doing it today by refusing to campaign for any Democrat who votes "No" on ObamaCare. Do we really need a whiny child running the White House?

March 16, 2010 at 10:02 p.m.
diamondr54 said...

This is the worst thing I have heard. So we are just going to have Mt.View in Chattanooga. I would not buy a Chev from them. I had my fill of trying to do business with them years ago. They are nowhere near as customer friendly as Newton's was. I am sorry they sold to Mt.View. Now I hear Herb Adcox is being booted out. I wonder how many strings the Watson family had to pull to get that done. Having one chevy dealer in a city the size of Chattanooga was a thought process very poorly done. Thankfully there are dealers outside Chattanooga within 25 miles to go to such as Kimball and Dalton.

March 16, 2010 at 10:58 p.m.
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