Auto dealer Herb Adcox said he will end a 57-year relationship with General Motors on Friday when Herb Adcox Chevrolet will change its name to Herb Adcox Automotive and begin selling and servicing all makes and models of used cars.
“We’re taking the signs down now,” Adcox said.
This marks the end of negotiations that began with a “wind-down” letter from GM in June 2009, Adcox said. Several rounds of offers and counteroffers between the automaker and Adcox’s dealership took place.
“We didn’t feel like the buyout was reasonable enough,” Adcox said.
GM previously has released a statement on the process in which it said, “With the right size dealer network, GM expects to continue to realize greater operating efficiencies and increased dealer throughput and profitability and overall cost savings.”
Adcox contends that his dealership never cost GM a thing.
“We pay for everything,” he said. “Even the brochures that they used to furnish us, we’ve been paying for them for the last 10 or 12 years.”
SQUABBLING
Other GM dealers in the Chattanooga area also have been involved in negotiating for their right to continue to sell new GM vehicles, including the Kelly Auto Group, which took a buyout, and Don Ledford Automotive in Cleveland, Tenn., which obtained a new franchise agreement and continues selling new cars.
The Chattanooga dealerships’ relationships with GM, which endured bankruptcy proceedings and a government takeover during the recession, stem from a decision by the U.S. Treasury’s “auto team” to force GM to shut down 1,454 dealerships by October 2010, according to a report by the Office of the Special Inspector General for the Troubled Asset Relief Program.
The government audit, released in July, claims GM “did not consistently follow its stated criteria and that there was little or no documentation of the decision-making process to terminate or retain dealerships with similar profiles, or of the appeals process.”
It goes on to say that not only were potential job losses not a substantial consideration to the government’s auto team, but contrary to public claims, “the acceleration of dealership closings was not done with any explicit cost savings to the manufacturers in mind.”
Adcox, who read the report before making his final decision, is still smarting from what he perceives as poor treatment, considering his years of loyalty to the automaker.
Did closures help gm?
“The task force that the government appointed to deal with GM, and the things they did and didn’t do, you wouldn’t believe,” he said. “The government told us we were going to have to be a so-called sacrifice, and if that’s not socialism I don’t know what is.”
When asked by auditors what GM will save by closing any particular dealership, one GM official stated the answer is usually “not one – cent,” according to the July audit. The same audit showed that a GM official stated that removing a dealership from the network does not save money for GM, and might even cost GM money.
For its part, GM released a statement saying that the inspector general report documented failures at the “old” GM, where “business conditions required GM to undertake difficult and urgent actions that would require sacrifice among all stakeholders,” the statement said. “The new GM is also moving forward to improve dealer relations and has already reinstated several hundred dealers and completed the arbitration hearings for the remaining dealers who filed cases.”
GM spokeswoman Ryndee Carney added that GM would “provide a final update on the changes to our dealer network within a week.”
Adcox said he has served on the state motor vehicle commission in Tennessee, and has been on the national board representing all dealers for over 25 years. He said he’s also served on “every dealer council GM’s ever had.”
“(When) your hearts been in this business as long as it has with us, it’s really a heartbreaking thing when you get a letter like that cancellation notice,” he said.
The dealership will not terminate any of its 35-40 employees, Adcox said, because the company previously cut staff restored itself to profitability just prior to receiving word that GM would not renew its franchise.