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Local dealer fights to keep Saab franchise
Intelligencer Journal
Lancaster New Era
Nov 21, 2009 07:24 EST
Manheim
By TIM MEKEEL, Staff Writer

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The letter arrived on Friday the 13th of November.

And sure enough, it contained bad news.

Saab owner General Motors was notifying Kelly Cadillac Saab that its Saab franchise will be shut.

The county's only Saab franchise was among 81 nationwide targeted for closure by GM, as GM prepares to sell Saab to Koenigsegg Group.

But Kelly Cadillac Saab is trying to change that fate.

The business, at State Road and Route 283, hopes to persuade Koenigsegg that its Saab franchise deserves to join the 137 that are to be preserved.

Kelly Cadillac Saab has launched a Web site, www.saveoursaabs.com, to gather comments from customers.

It also has collected research showing the county is a big, ripe market for Saab.

"We're trying to keep this franchise. It's really for our customers. The people are very loyal," said Kelley Hughes Kelly, marketing director for Kelly Cadillac Saab.

The demise of the franchise "would leave a lot customers in the lurch," added Kelly, who owns the franchise with her husband, Geoff.

After getting the letter from GM, Kelly Cadillac Saab appealed to Koenigsegg, which gave it until this coming Monday to state its case.

So the dealership is preparing to send the Swedish sports-car manufacturer a detailed e-mail.

In the e-mail, Kelly Cadillac Saab will offer to fly company founder Christian von Koenigsegg to Philadelphia, so it can meet with him there and explain its stance in person.

Kelly thanked The Lancaster Chamber of Commerce & Industry and Frontier Service Design for helping the business respond quickly.

"We were caught off guard, frankly, because we have a very large customer base. … It took us a while to catch our breath and come up with a game plan," Kelly said.

The business, which bought the Saab franchise in 2001 from Henry Mearig Inc., has nearly 1,500 active Saab customers who bring their cars in for maintenance, repairs and warranty work.

"Saab customers can't take their cars just anywhere. Saab is a unique vehicle," said Kelly, praising the skills of the franchise's five Saab technicians.

If the Saab franchise here closes, local Saab owners would face a long haul to have service performed specifically by a Saab dealer.

Employees at the Reading and Mechanicsburg Saab franchises said those locations are closing, but an employee at the West Chester franchise said it will remain open.

While the Saab service work here remains strong, Saab sales here are down, said Kelly, citing the recession and a shortage of cars, as Saab switches its production lines to a new version of its 9-5 sedan.

The franchise's sales of new and used Saabs combined were about 135 cars annually from 2005 through 2007, a figure that plunged to 59 so far this year.

"We haven't been able to order any new cars in 10 months, because they're not building them," said Kelly, noting that the franchise has 10 new and three used Saabs in stock.

If a customer wants to buy a model that the franchise doesn't have in stock, it will try to get the desired car via trade with another franchise, she explained.

tmekeel@lnpnews.com


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Does anyone understand how GM benefits from closing dealerships? As best I can tell, the franchise agreement is simply a private contract between 2 entities and GM is exercising their contractual option to terminate the agreement.

So the cars sitting on the lot are owned by GM and the dealer pays a monthly fee for having the car there. I don't know if the cars ever go back, but that would seem to be rare occurrence.

The obvious question is why close the dealership rather than re-negotiate the dealership agreements? I mean if the dealership payed higher fees for having cars on the lot or was obligated to buy the cars after a certain amount of time, then how would it hurt GM to have extra dealers?

It doesn't seem like a smart business decision. Why buy a Saab if you are worried about getting warranty work done on the car? The only logic I can think of is that the remaining franchise agreements will be more valuable so you can then go and re-negotiate those deals.
skeptic2
Skeptic,

First of all, GM is not closing the dealership. All they are doing is telling them that in order to complete the sale of Saab to Koenigseg, they must inform them of termination of their franchise agreement with Saab.

If the dealer wants to sell Saabs in the future, he will have to negotiate that agreement with Koenigsegg post-Saab sale, which is what he is doing.

I think having a Saab dealer in Lancaster County is on par with having a Bentley dealer.

Besides, if you are a Saab (or Volvo) aficionado, go to Swedish Motors in Marietta. Don't put your auto sale into the hands of GM or any other of the American auto-whore companies.
dean
QUOTE (dean @ Nov 21 2009, 11:45 AM)
Skeptic, First of all, GM is not closing the dealership. All they are doing is telling them that in order to complete the sale of Saab to Koenigseg, they must inform them of termination of their franchise agreement with Saab. If the dealer wants to sell Saabs in the future, he will have to negotiate that agreement with Koenigsegg post-Saab sale, which is what he is doing. I think having a Saab dealer in Lancaster County is on par with having a Bentley dealer. Besides, if you are a Saab (or Volvo) aficionado, go to Swedish Motors in Marietta. Don't put your auto sale into the hands of GM or any other of the American auto-whore companies.
Yes, Kelly will continue as a Cadillac dealership. Something like 80 Saab dealers are having their franchise agreement terminated now. The majority will continue on without any change in their franchise agreement after Saab is sold.

I'm actually more interested in the general concept of GM (and Chrysler) cutting back the number of franchises and why it might help their bottom line.

My prediction is that very few people will travel out of the county to buy a new Saab.
skeptic2
Saab future now in doubt:

http://www.washingtonpost.com/wp-dyn/conte...9112401745.html

Only 513 sold last month in the entire US. Obviously not a lot of demand.
lee41
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