In Pa.'s small towns, auto dealers have deep roots

SANDY LAKE, Pa. - Pennsylvania is bearing the brunt as General Motors Corp. and Chrysler Group L.L.C. end their associations with many dealerships.

The companies are pulling a total of 143 franchises in Pennsylvania, more than in any other state. Ohio is second, at 126.

A key reason for the large number of franchises to be withdrawn in Pennsylvania is that the state has fewer new-car sales per dealer than many other states. To blame are declining sales and the large number of small-volume shops in a vast state composed largely of small towns isolated by mountains.

In 2008, Pennsylvania auto dealers averaged sales of 508 vehicles, compared with a national average of 660 vehicles per dealer, according to figures from the National Automobile Dealers Association.

Foreign dealers in the United States typically sell 800 to 1,200 new vehicles a year, compared with 300 to 400 for domestic dealers, said Paul Melville, an attorney with Chicago-based Grant Thornton L.L.P., a corporate-restructuring firm.

The Detroit automakers want fewer, larger, more modern dealerships so that each sells and services more cars efficiently.

GM, for example, is pulling out of a Chevrolet dealership in tiny Sandy Lake, about 60 miles north of Pittsburgh. That is drawing a strong reaction from residents, who say the company is marring the town's character.

Schoolteacher Marie Kohr and her husband, Kevin, customers of the dealership, Walker Chevrolet, went to GM with a message: "You are killing America."

The Kohrs included with their letter a copy of a high school yearbook ad that Walker bought in Sandy Lake in 1937 - a purchase the dealership has made every year since.

"Herein lies the problem," the Kohrs wrote. "Our local dealer has been unfairly deemed worthy of being closed. . . . Apparently, loyalty is not important to you."

GM announced plans to pull 90 franchises in Pennsylvania, and Chrysler is withdrawing 53 in the state - and along with them, a slice of Americana.

The companies typically are targeting lower-volume, older franchises such as Bob Kaltenbaugh's brick-and-cinder block Walker showroom on Main Street in Sandy Lake, a town of 743 people.

Kaltenbaugh's grandfather opened Walker Chevrolet in 1933, and sales have declined slowly but steadily since Kaltenbaugh sold 200 new and used vehicles the year he bought out his uncle: 1984.

Still, his customers consistently "buy American," mostly Impalas and pickups. Kaltenbaugh, who still plans to sell used vehicles after GM pulls out, figures the company should be happy that he can count on selling 60 new vehicles this year, plus 75 used ones.

Kaltenbaugh says his customers will have to drive 15 to 20 miles to another GM dealer, and he is puzzled by the company's decision. So are some experts, who say closing dealers will not automatically boost sales at remaining outlets.

Paul Taylor, the chief economist of the National Automobile Dealers Association, said GM and Chrysler wrongly assumed most customers would not switch brands if they were forced to drive to another town.

The Lansdale, Pa., dealership owned by Donald Franks might be an example of that: He is not sweating the loss of his Pontiac and Cadillac franchise at J.L. Freed & Sons. That's because he also sells Hondas, about 1,200 a year compared with just 200 GM cars.

Pennsylvania dealers had the lowest sales rate last year among large states.

                     Total          Sales per

State              dealers           dealer

California        1,492           939

Florida              923           1,030

Illinois                903             621

Maryland             342             832

Massachusetts       459             630

Michigan             745             766

New Jersey          548             971

Pennsylvania        1,097             508

Texas              1,312             909

Virginia                537             629

U.S.              20,010             660

SOURCE: National Automobile Dealers Association

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