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Restored GM dealers want cars -- now

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Restored GM dealers want cars -- now

Chrissie Thompson

Automotive News -- April 12, 2010 - 12:01 am ET

Dealer Tom Hessert Jr.'s Chevrolet business is back -- almost.

He says he has fought off a whispering campaign from competing Chevy dealers and sent in the necessary information for General Motors Co. to reinstate his Moorestown, N.J., store.

But now, like many of the 661 dealers to receive welcome-back offers from GM, Hessert wants to start stocking new vehicles.

Returning dealers face anxiety on several fronts: When can they start ordering cars? Will those cars arrive quickly enough -- especially the hot models in short supply -- to capitalize on increasing consumer confidence and the prime warm-weather selling season? And can all this happen before 2010 model production wraps up?

Like other dealers rejected last spring, Hessert was still in business for service work and used-car sales, but he couldn't order new product. And when customers went elsewhere to check out new Chevrolets, he says, dealers told them Hessert's store was on its way out.

"Our new-customer possibilities were dwindling," he says.

Now that GM has offered Hessert reinstatement, he's getting the word out that he'll soon be back in business. Two local newspapers have run front-page stories about his upcoming reinstatement, and he's planning ad campaigns to run once his new product arrives.

At last: Hiring

But he's unsure when the vehicles will come. Like many dealers, he's still waiting to receive an amendment to the wind-down agreement that dealers must sign to be reinstated and eligible to order cars.

In the meantime, Hessert is preparing to fill, gradually, some of the 30 positions he had cut from his staff of 60.

He says he'll keep most of the other cost cuts he made to lower his breakeven point 35 percent during the wind-down. And already he has saved money by withdrawing his arbitration case against GM -- "at the dismay of the attorneys," Hessert says.

Dealers had 10 days to sign the letters of intent offering reinstatement, which GM sent in mid-March. They also must submit proof of floorplan financing and their business licenses before they receive amendments to sign, says GM spokeswoman Ryndee Carney.

Some dealers have completed that process and can order cars, Carney says. The amount of time each case will take varies, she says.

Other dealers, such as Pat Berrang, say they're still lining up new-car floorplanning or renewing their state licenses. GM offered to reinstate Berrang's Cadillac-GMC dealership in Waynesboro, Va. He is working to get a new floorplan from GMAC Financial Services, but many customers expect Berrang to resume sales of new vehicles immediately, he says.

Says Berrang: "The public is misled, because I've had so many customers come up and say: 'Gee, I'm relieved. I'm so happy.' They think they're just handing us the keys back."

He has 60 days from signing GM's letter of intent to send the company everything it requires, so Berrang could be a few months away from getting new product.

Running out of time

Meanwhile, dealers are running out of time to order new vehicles for the start of warm-weather selling. GM will build its last 2010 models from dealers' orders in April and May, spokeswoman Carney says.

If dealers rejoin in April, "we feel that we can accommodate their needs, depending on what they're asking for," she says. "As we get in to May, it gets a little more questionable. They might have to take 2011 models."

Dealers also say they wonder whether GM will be able to supply vehicles for a pool that will include up to 661 more dealers, since the automaker has struggled to keep up with demand for vehicles such as the Chevrolet Equinox and GMC Terrain crossovers.

According to the Automotive News Data Center, both of those models started April with a 23-day supply, a third of what analysts typically recommend.

GM is ramping up production for several popular models. Carney says adding back dealers is just one piece of GM's production puzzle.

Nevada dealer Greg Heinrich, Chevrolet's representative on GM's National Dealer Council, says the automaker has told council members that "they've done the calculations on how they find the product."

Says Heinrich: "They're very much aware of the concern that dealers have, that product's scarce. And now if these 'x' amount of dealers come in, are we going to have enough?"

Wanted: More vehicles

GM is adding production to boost dealer stocks.

Plant Products Days supply When dealers will see improvement

Ingersoll, Ontario Chevrolet Equinox, GMC Terrain 23 60-90 days

Oshawa, Ontario Chevrolet Camaro 44 Late June-July

Delta Township, Mich. Buick Enclave, GMC Acadia, Chevrolet Traverse 35-47 This month

Source: GM March sales call and Automotive News Data Center

Read more: http://www.autonews.com/article/20100412/RETAIL07/304129967/1422#ixzz0ktVlJbAA

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