We hope GM hasn't hit the mother of all icebergs.

We hope GM hasn't hit the mother of all icebergs.

Tuesday morning, the President of the Colorado Auto Dealers Association (CADA), Tim Jackson, was on a local radio station KCOL – 600 AM talking about the state of the automotive industry. The topic was focused primarily on Chrysler and GM’s recent dealer closings. So what did the hosts Keith and Gail have to ask Tim Jackson?

The first topic was about Chrysler’s dealer closings. Some of you might have heard that some dealers around the country heard about their dealership contracts being terminated from the media. Tim confirmed that this is indeed a true occurrence and that it even happened to dealers in Colorado. The question is how? Tim said that this was because the Chrysler dealer-closing list was part of a court document that is public record. So basically any diligent reporter could have obtained the information and some did before the overnight UPS packages with the termination letters could reach the different Chrysler dealerships.

Another interesting twist was a question Gail asked Tim about the Chrysler dealer-closing situation. Gail asked if Tim could address how Chrysler choose to close the dealerships around the U.S. Apparently, there has been some question about the rational used to close the dealerships, mainly because some dealership franchises have complained that they were shut down even though they were a number 1 dealer in their market. While Tim wouldn’t address any kind of conspiracy theory, he did confirm that the CADA hasn’t been able to get an explanation for how dealers were selected or why a number 1 dealer in Colorado had been closed. This peculiar situation is exacerbated by Chrysler’s announcement that they will have open points (markets without dealers) and that they will be in those markets again (see Automotive News report). This implies that they will be opening new dealerships in markets that they just closed underperforming dealerships.

chrysler-logo.jpg

chrysler-logo.jpg

Chrysler’s peculiarities aside, Gail and Keith also asked Tim Jackson about the GM dealer closings and if there was any information on how many and which ones. Tim said that GM is handling their dealership closings differently by keeping the list out of the public domain. GM would like to be able to communicate with the dealerships they are terminating before the press or anyone else does. Most likely they would also like to be able to prepare for the backlash that will come from terminating an estimated 1,100 dealerships. Unfortunately, Tim wasn’t able to say much more since the information isn’t available, but he did say that they estimate around 13-15 GM dealerships will close out of the 88 roof top dealerships in Colorado.

Bottom line—The state of both Chrysler and GM is causing alarm among the consumers and politicians alike. In fact, Tim Jackson is currently attending Senate hearings in Washington D.C. that are a result of the Chrysler and GM dealership terminations. GM is supposed to reinvent itself and focus on the “small” and “efficient” car, but it seems to me that they have to actually keep loyal customers first, which may be a monumental task.

 

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