Duman not on GM closure list

Published 11:26 am Saturday, May 16, 2009

FRANKLIN—Although General Motors is closing about 1,100 dealerships across the country, it appears the Mike Duman dealership in Franklin will not be one of them.

“We haven’t heard anything from GM,” Duman said Friday. “Anything can happen, but I don’t anticipate a problem based on the video conference that I listened to today.”

Duman said that even if GM terminated his franchise agreement, he would still run his Franklin business, located at 1201 Armory Drive.

“If by chance something did happen, we would still continue to operate out of that location,” Duman said. “We could possibly represent a different manufacturer. Minimally we would continue to sell used cars.”

GM began the process of notifying approximately 1,100 of its 5,969 dealerships that their franchise agreements, most of which run through October 2010, were being terminated. The company declined to release the names of the dealerships being closed, electing to instead leave the decision over whether the information is made public to the dealerships themselves.

Duman said GM was using several parameters to decide which franchises would be closed. The company looked at whether dealerships sold other makes of vehicles or if they exclusively sold GM cars, if they represented every GM line, the age of the facility and service equipment and financial strength.

“For those reasons, I’m not anticipating a problem,” Duman said. “We do not represent any other brand;, we’re strictly a GM dealership. We represent every GM line with the exception of Cadillac. We have a fairly new facility, and our service equipment is not outdated, everything is current.”

Market penetration was also a metric being used by GM.

“Even though our sales have not been what I’d like for them to be, based on current economic conditions we have exceeded the objectives that GM has given us every month,” Duman said.

When asked if he thought closing dealerships was a smart move for GM, Duman said, “For the dealerships that survive, it’s better for them.”

“For General Motors, I imagine it reduces their costs having to deal with fewer dealers. In my opinion, why they haven’t been able to compete, to some extent, is that their dealer body is based on when the domestic industry had over 70 percent of the market, rather than the roughly 50 percent that they have now. They’re reducing their dealer base so they have less folks to deal with, plus those individuals left will be more viable as dealers and hopefully will be more profitable.”

GM’s announcement that it would close dealerships came one day after Chrysler LLC said it would shed 789 of its 3,181 dealerships nationwide by June 9, including Waverly Motors in Sussex County. Chrysler entered Chapter 11 bankruptcy on April 30.

Duman said he wasn’t aware of a plan for GM to enter bankruptcy anytime soon, but said he believes the company will close 600-700 Saturn and Hummer dealerships, and shut down another 600-700 dealerships through attrition.

“The state of Virginia has very, very tough franchise laws,” Duman said. “Pre-bankruptcy, or without GM doing a bankruptcy, the franchise laws are very protective. It would be very expensive for GM to terminate a dealership in Virginia. But if they happen to go bankrupt, like Chrysler did, then the bankruptcy laws usurp the franchise laws and they get to do whatever they want without any monetary consequence. If they go into bankruptcy it makes it easier to drop the hammer. Then the trustee can do whatever they want in 90 days and then come out of it and be exactly where they want to be without any fuss or muss.”

Duman opened his first dealership, a Ford store, in Suffolk in 1980. He operated that business until selling it in 1991, and then continued to sell used cars. Duman began operating the former Champion Chevrolet dealership in Franklin in May 2008, converting it to the Duman name in August.

Franklin’s Chrysler dealership closed in 2007. Western Tidewater’s only remaining Chrysler store, Starr Motors in Suffolk, is not on that company’s closure list.