GM dealers expected to learn their fate today

General Motors
A General Motors made GMC vehicle waits for a buyer at a dealership in Los Angeles on May 7, 2009. GM slashed global production by more than 900,000 vehicles, or 40 percent, as it tried to rein in costs and inventories but still burned through a whopping $10.2 billion in cash after revenues were nearly cut in half.
MARK RALSTON/AFP/Getty Images

Many of the 149 General Motors dealerships in Minnesota are expected to learn their fate Tuesday following the automaker's filing for Chapter 11 bankruptcy Monday.

GM expects the bankruptcy court process to last 60 to 90 days. And if it goes as planned, the automaker will emerge as a leaner company with a smaller work force, fewer plants and greatly trimmed dealership network.

Scott Reid was among the Minnesota GM dealers taking part in conference calls Monday between dealers and GM management.

Reid says dealer notices are probably en route already.

"Tomorrow, we will have letters that we're either with them for the long run or not," he said.

Reid expects his Arrow Buick-Pontiac-GMC dealership in Inver Grove Heights, like most GM dealers in the Twin Cities, will be safe because it carries multiple brands.

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"I think we're in good shape here," he said. "Outstate, there could be some stand-alone GMC stores, stand-alone Pontiac, or stand-alone Buick stores that could be jeopardy. But metro-wide, here in Minneapolis-St. Paul, we are in pretty good shape in the metropolitan area."

GM has signaled that it will cut 40 percent of its dealers across the country. GM had already told some dealers -- including 30 in Minnesota -- that the automaker intends to drop them as dealers by next year.

But now that GM has filed for bankruptcy, it's expected to put teeth in its plans for closing unwanted dealers and adding more dealers to its elimination list.

Scott Lambert, executive director of the Minnesota Auto Dealers Association, expects GM will drop perhaps 30 more Minnesota GM dealers. That would mean a loss of 60 GM dealerships overall, or about 40 percent of the total in the state.

"They have 149 GM dealers in Minnesota. All the dealers today are a little fearful, wondering if they will survive to see the new GM," he said.

Lambert says GM dealers that are cut loose want a fair solution on inventory and parts issues. Dealers don't want to get stuck with cars, trucks and parts they can't sell, or at least sell for what they paid for them.

"Frankly, a lot of the dealers have made big investments in these stores at the behest of these companies, and they'd like to be compensated for that. Now, the chances are pretty slim. But those are the issues," he said.

Those issues will get an airing in a Congressional hearing Wednesday.

U.S. Senator Amy Klobuchar says there needs to be a broader discussion of the impact of the Chrysler and GM bankruptcies, especially as they hit folks outside of Detroit.

"It's very important that we get the executives to talk more about how we can help these dealers out in the Heartland, out in every state in America," she said. "The hearing is going to focus on protecting dealers and consumers."

To be sure, some consumers worry about buying a car or truck form a company in bankruptcy, but Lambert says consumers needn't worry about parts and warranties as a result of the GM and Chrysler bankruptcies.

"The government has guaranteed the warranties on these vehicles. So, that is the one thing consumers should not be worried about."