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Car dealers, shoppers ponder changes for General Motors, Chrysler

Obama's promise to back new car warranties comforts shoppers. Dealers hope the automakers restructure before it's too late.

March 31, 2009|Andrea Chang

Car dealers said Monday they hoped General Motors Corp. and Chrysler would be spared a trip to the wrecking yard, while shoppers were comforted by the Obama administration's promise to back new car warranties in case the auto giants failed.

For the thousands of workers who depend on GM and Chrysler, the government's rejection of the companies' restructuring plans and the ouster of GM Chairman and Chief Executive Rick Wagoner were a big blow. Now, with GM given 60 days to restructure and Chrysler given 30 days to work out an alliance with Italian automaker Fiat, dealers said they were remaining focused on day-to-day sales but anxious for a deal to get accepted.

"They'd better get it done; my livelihood depends on it," said Tom George, general manager of Thorson Motor Center, a GM dealership in Pasadena.

For consumers, the government said it would protect warranties on GM and Chrysler vehicles purchased in the next two months as a means of reassuring buyers worried about the continued existence of the automakers. The plan also includes a possible trade-in program, which is still being worked out.

That iron-clad warranty was a relief to shoppers such as Alfred and Helen Dennis, who bought a Buick Lucerne from Thorson last week.

On Monday they returned to the dealer with a trade-in vehicle and said, despite feeling apprehensive about the Obama administration's rejection of GM's plea for additional funding, that they were still happy with their purchase.

"No regrets yet," said Alfred Dennis, 86, an actor from Woodland Hills. "Let's hope the future doesn't bring any."

Several of those out kicking the tires Monday said many of the auto industry's problems stemmed from its failure to correctly gauge consumers' changing tastes and its delay in reacting to the economic crisis.

In the last year, new car sales have come to a standstill at many GM and Chrysler dealers, and dozens have been forced to close.

GM "should have started making changes 25 years ago," said Zack Franklin, looking at a Lucerne at Thorson.

"The United States needs domestic auto production," the 82-year-old retiree from Pasadena said. "But I think America has been slow in reading the handwriting on the wall."

Although President Obama's 60-day extension for GM and its 30-day extension for Chrysler signaled to many that the automakers wouldn't be allowed to fail, dealers and customers were uneasy about the administration's heavy hand in retooling the companies.

"I have a deep philosophical disagreement with the government getting involved with things like that, but the horse has already left the barn," said John Dains, 42, who was shopping at Alhambra Chrysler Jeep Dodge on Monday. "They may as well follow through and back up the companies. You can't stop halfway."

George, of Thorson, said he was "hopeful that with the extension, they'll get things worked out" but was "disappointed that they're telling GM what to do."

Others said the companies should just be allowed to collapse. "If they just let things take their natural course, it's going to hurt a lot of people, but then we'd be on solid footing to truly build a better economy," said Michael Vessey, 59, a financial trader who was buying a car at Symes Cadillac Saab in Pasadena. The Obama administration "has got no business in private business."

Dealers are bracing themselves for an overhaul in the auto industry in coming weeks. If Chrysler pairs up with Fiat, the company could see Chrysler lose its U.S. roots.

But Dains, a computer programmer from Santa Monica, said he would welcome a merger with Fiat.

"If they can keep some jobs here and keep some American designs and engineering, it's better than them going out of business completely," he said. "I think that's the alternative."

For the most part, dealers said they were ready to enter a new era of car manufacturing and understood that sweeping change was needed to restructure the industry.

The government "wants to see balance sheets cleaned up of both these companies and then move forward. I think at first blush a lot of people might think this is negative, but this is a positive," said Leo Bunnin, who owns four GM dealerships in Ventura County.

"Clearly, we need to go to the next chapter," he said. "The model of the past doesn't work."

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andrea.chang@latimes.com

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