Valley Motors Shares GM’s Rough Times By Sandy Vondrasek

Valley Motor Sales of Bethel was one of 1100 GM dealerships advised, by registered letter last Friday, that the car manufacturer wants to end its Chevrolet franchise agreement with them in October 2010, owners Dennis and Gary Wood confirmed this week.

That doesn’t mean, however, that the long-time Bethel dealership and service facility is closing, the brothers stressed in a Tuesday interview at their Pleasant Street showroom.

The men vowed to pursue the appeal process offered by the Detroit carmaker, and they are already investigating alternatives, they said, should their appeal fall through.

And, in the meantime, Dennis Wood stressed, "We are not closing—we are selling new Chevy trucks and cars. We’d like people to know we are still in business and not to shy away."

The dealership has already diversified into selling "just about any kind of used vehicle," and will continue to do so, his brother added.

According to Gary Wood, GM’s letter indicated that the "the numbers and dealers are not finalized, and that they would appreciate hearing from us" via the appeal process.

Valley Motors has until the end of the month to file that appeal, and the Woods said they thought they could put forward a persuasive argument to keep their dealership, which has been selling Chevy trucks and cars since the 1920s.

The brothers feel that geography—they are the only full-service dealer in a 30-mile radius—is one of their strongest arguments.

"We have a very large, up-to-date service facility—better than most small dealers," Gary said. "And it’s a fact we have very highly trained service people."

The service center, authorized to do Chevrolet warranty work, also has a full-service body shop. Valley Motors employs 16, with 12 of them working in parts and service.

If GM cuts its rural dealers, Gary argued, it will likely lose rural customers.

"People might go to Barre or Lebanon to buy a vehicle," he said, "but most people around here don’t want to drive there to have warranty work done. We cheerfully service vehicles, wherever they are purchased."

Gary Wood said it was clear that GM needed to reduce the number of franchise dealerships. GM has the same number of dealers now as it had post-World War II, Wood said, when it had 50% of the market share and was one of only three makes being sold in the country.

GM, which also owns and manufactures Saturns, Hummers, and Saabs, now has about 20% of the market share, Wood said. Competitive dealerships are particularly problematic in urban areas, some of which have four or five GM dealers in a 10-mile radius, he said.

It’s not entirely clear to them, Gary Woods said, how GM selected which dealerships to cull, but it does seem, he added, that GM doesn’t understand the value of its small rural dealers.

It has been reported in the media, he said, that GM is targeting "underperforming" dealerships.

"It is more accurate to say ‘small dealerships,’" he added. "They don’t understand Vermont, and they don’t care."

Small dealers in Vermont may not have huge selections on their lots, explained Gary, but what they do have are "great relationships" with other small dealers throughout New England and upstate New York. A tradition of "dealer swaps," he said, gives buyers "access to virtually hundreds of thousands of vehicles."

Tough Day

"It was a tough day," Gary Wood said of Friday, when GM’s letter arrived. "It’s not personal, but you take it personally."

The first thing the brother-owners did was to gather together employees, to give them the news directly.

"The employees have been great," Gary said. "Everyone is pitching right in."

If Valley Motors does lose its dealership, it will lose more than the ability to order and sell new Chevy trucks and cars. It would also lose its GM-certified used vehicles, its parts inventory, and ability to do warranty work.

The good news is that GM is offering to buy back from its dealers any unsold cars, current parts, and specialized tools used for warranty work.

That offer puts at-risk GM dealers in a better position than the 1900 Chrysler dealers who were advised last Thursday that they were losing their franchises, as of June 6. Chrysler, which is in bankruptcy/reorganization, "is "sticking its dealers with their inventory," Gary Wood said.

Most won’t have enough capital to pay what they owe for those vehicles; and they have just a few weeks to sell off and get whatever proceeds they can. Most will have to declare bankruptcy themselves, Wood said.

GM is facing its own day of reckoning as the Obama administration has given it until June 1 to come up with a restructuring plan. GM has indicated that more dealership cuts—above the 1100 just notified— will be part of that plan. The U.S. government has already given about $25 billion in aid to Chrysler and GM.

The Woods are hopeful that a franchise-revision law, passed by both the Vermont house and senate this spring will be signed by the governor.

The proposed law would forbid the carmakers offering franchises from forcing dealers to sell only their brand.

Gov. Douglas told The Herald Tuesday that he will "probably" sign the law.

"Most dealerships are in support of it. It makes sense to have a certain flexibility in (franchise) relationships. Not everyone in the industry is for it," he said.

Community Pillar

Chevrolet has a long history in Bethel, and Valley Motor Sales has been a strong supporter of the community for decades.

The dealership began in 1928, according to Dennis Wood, when Leon Perkin’s Mobile gas station became a Chevrolet "agency." The business was sold in 1934 to Benson family, and was renamed Benson Chevrolet.

Newall Wood, who grew up in Royalton, started working at Benson Chevrolet on May 16, 1946, after serving three years in the U.S. Navy. Starting as a "washboy," he went on to work in the service department, before turning to sales. Wood purchased what was then called Valley Motor Sales in 1964.

His sons Dennis and Gary, who worked alongside their father for years, have since taken over the business.

Over the years, Valley Motors has provided significant support to the Bethel recreation center, Peavine Park, and the Bethel Schools.

The business owns the town’s Little League field, noted Dennis, and over the years, Valley Motors has supported the basketball camp, bought uniforms for the basketball team, and made other donations.

"Recently we’ve had to cut back," he admitted, "to watch pennies."

Sales have been down, the Woods said.

"Business has not been good for any dealer, because of the economy," Gary Wood noted.

The U.S., which has had annual new car sales of about 17 million, will likely see car sales drop to below 10 million in the next year or two, Dennis Wood said.

Valley Motor Sales, which used to sell 120 vehicles annually, a majority of them trucks, saw its annual sales drop to 70-80 last year.

One big advantage that Vermont dealers have had over their counterparts elsewhere in the nation is that the state’s banking system is in fairly good health.

"There are dealers who profess difficulty in obtaining loans for customers," Gary Wood noted. "We never saw that."