Want to buy a new Cadillac?
You'll have to go to the Iron Range, after Krenzen of Duluth turned down General Motors' offer to restore its Cadillac franchise.
Krenzen was among several Northland Cadillac dealers who had their franchises pulled last year as a result of GM's bankruptcy. The automaker planned to shed dealers as part of its reorganization, claiming U.S. sales didn't justify so many dealers.
But in April, GM offered to reinstate Krenzen and several other former Northland Cadillac dealerships.
"We actually chose not to be renewed," said Scott Krenzen, one of the owners. "They basically would have required an exclusive Cadillac facility. We just didn't feel our marketplace justified a stand-alone Cadillac facility."
ADVERTISEMENT
That's because Krenzen also is a Honda, Nissan, Lincoln and Mercury dealer, and GM doesn't want its cars sold with other automakers' vehicles.
General Motors will keep open about 900 dealerships across the country that it had planned to close, a shift in corporate strategy that could preserve thousands of jobs.
Like Krenzen, Ken Waschke Auto Plaza in Virginia lost its Cadillac franchise last year.
"You had a right of appeal," explained Brent Robinson, sales manager for the dealership, which appealed to GM and got its franchise back in April. "Of those who did, the majority got their franchises reinstated."
That leaves Waschke Auto Plaza and Ranger-GM in Hibbing the only dealerships to sell new Cadillacs in Northeastern Minnesota.
Ranger also fought its franchise loss as GM's October deadline to phase out Cadillac at its dealership neared. Ranger was heading for arbitration when GM offered to return the franchise.
They took it.
"It's very important to have that Cadillac line up here," said Mark Lantz, Ranger's sales manager. "The way they would structure it, the only Cadillac dealers in Minnesota would be in the southern third of the state."
ADVERTISEMENT
Because Ranger carries only GM vehicles, it does not have to have a separate showroom building for the Cadillac line.
All three dealerships lost the ability to carry Pontiac, after the line was discontinued in a cost-saving measure.
The automaker's move to retain dealerships came too late for DeVinck's Inc, a longtime mainstay in Superior's North End. The dealership, which didn't appeal the decision because of the costs involved, closed April 30.
GM will end up with about 5,000 U.S. dealers, up from original plans for 4,100, said Mark Reuss, GM's North America president. It had about 6,000 when it filed for bankruptcy last year.
The change represents a desire by the automaker's new leadership team to avoid the expense of closing dealerships, a step they say is not critical to bring the company back to profits.
GM's large dealer network "used to be one of our main, massive strengths," Reuss said. "I still think that's true. It can be true with the right dealers."
The Associated Press contributed to this report.
