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GM dealers that were restored must wait to restock

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GM dealers that were restored must wait to restock

Chrissie Thompson

Automotive News -- June 7, 2010 - 12:01 am ET

Reinstated Cadillac dealer John Holt says his sales staff has never had to sell cars that aren't already on his lot. But that may have to change.

That's because the Oklahoma dealer, whose Cadillac franchise was part of the first round of General Motors Co. reinstatements this spring, is selling out of Escalade SUVs and SRX crossovers faster than he is receiving them from the factory.

"Our thought process is going to have to change from selling something that's here to selling something that's on its way," he says.

Holt started getting new Cadillacs late last month after he, along with other wind-down GM dealers, was prohibited from ordering new vehicles for almost a year. Although they're glad to see a few vehicles on their lots again, Holt and other dealers say it will take at least a few months for inventories to return to normal.

So far, Holt has received 12 vehicles from GM, and he has sold five or six already after having run two TV commercials. On order are 30 more vehicles, which Holt says is a suitable allocation. But he won't receive them for about a month, and he's already out of Escalades and has sold his last SRX.

Holt's store in Chickasha, about 45 minutes outside Oklahoma City, was one of the 2,000 dealerships hit when GM decided to trim its dealer body ahead of its bankruptcy last summer. The company says it has offered to reinstate franchises at 666 dealerships, and most dealers have accepted.

Many more dealers say the automaker, in recent weeks, has agreed to let them back in. GM declined to release an updated reinstatement tally.

Holt's store was selling 100 Cadillacs a year before GM said it would wind down his Cadillac franchise and leave his Chevrolet operations in place. He says his goal is to have 25 Cadillacs on his lot. Whether his allocation lasts the summer is "going to be real close," he says.

Brian Hamilton faces the same scenario. He is adding Buicks and Cadillacs to his Chevrolet store in Kearney, Neb., after GM reinstated those franchises. He was first able to order vehicles about a month ago and has 14 Buicks and nine Cadillacs on the way. Four Buicks will arrive any day, but the Cadillacs won't start coming until late June or early July.

Empty by August

In the year before GM said it would wind down his franchises, Hamilton sold about 55 Buicks and 30 Cadillacs. But he still thinks he will run out of his allotted inventory by August.

Kurt McNeil, Cadillac's sales chief, says the brand has a 112-day supply of Escalades, compared with the industry's standard of a 60-day supply. That's partially because the brand anticipates having to restock the hundreds of Cadillac dealers re-entering the fold, he says. Cadillac franchises made up a disproportionate number of GM reinstatements.

For Ron Marhofer Chevrolet, outside Akron, Ohio, restocking is more daunting. The dealership's once-empty new-car lot has received just three vehicles so far -- all Camaros -- compared with the 325-vehicle inventory it had in May 2009. Marhofer was selling 60 to 70 new vehicles monthly before GM decided to wind down the dealership.

Now nearly 100 vehicles are on order, but that's not enough. And only 44 are 2010s. The rest of the orders will wait until GM switches model years. That means the dealership lot will remain too empty until at least August, says Chris Moorhead, the store's general manager.

"We were grateful that we got reinstated, but it was right at the end of the model year," Moorhead says. "If reinstatements would have happened a month sooner we would have been in better shape."

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100607/RETAIL07/306079964/1422#ixzz0qAd4iDnt

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