When the letter from Chrysler LLC arrived at Spokane Valley's Dishman Dodge last Thursday, general manager Mark Waltermire says he couldn't be sure what it would say.

Chrysler had announced plans to sever ties with 789 dealerships across the country, and was notifying its dealers whether they would be part of the automaker's future. The letter said Dishman Dodge would be.

"I was always positive we'd be OK, but I never want to assume anything," Waltermire says.

Contacted earlier that week, longtime Spokane GM dealer Dale Cornwell, faced with his own uncertainty as General Motors Corp. prepared to do similar dealership cutbacks, said, "You've got a lot of dealers sitting on pins and needles, not knowing if they are going to be a dealership next week. You just can't plan ahead right now."

Cornwell, who co-owns Becker Buick Pontiac GMC Inc. here, says that dealership got its notification on Friday, in which GM said the Spokane enterprise would continue in the fold.

Although uncertainty remains on the GM side, since the automaker didn't reveal a list of dealership closures and will be notifying more dealers of their future in the coming weeks, dealerships in general here say they're pressing on—trying to make money in a difficult economy.

With overall car sales down, especially sales of new cars, dealerships are paying closer attention to the mix of vehicles they keep in inventory—focusing more on used cars—and ensuring that other profit centers, such as parts, service, and auto-body repair continue to thrive.

Dealerships reached for this story say they're surviving the recession and are seeing decent customer traffic on their lots and profitability in used cars, parts, and service.

"The used-car market really seems to be where the opportunity is for auto dealerships," says John Agost, general manager of Saturn of Spokane. "We're in a position where we can continue to weather this storm."

Automaker cutbacks

The auto industry is in the midst of a period of historic change, particularly dealerships with ties to Chrysler and General Motors. Chrysler already has filed for bankruptcy reorganization, and many believe GM will file if it's not able to restructure by a government-imposed June 1 deadline.

Auto dealers here that spoke to the Journal of Business say they were relieved not to be among the nearly 2,000 notified last week by the two automakers that they either weren't going to get renewed franchise agreements or that they were going to be eliminated.

Chrysler says its dealer network is no longer effective, and has too many stores competing with each other. GM says that long-term, it should have fewer, healthier dealers, with more sales per outlet.

GM announced Friday it was contacting "1,100 underperforming and very small sales volume U.S. dealers," letting those dealers know it "does not see them as part of its dealer network on a long-term basis." The company, which produces such brands as Chevrolet, GMC, Saturn, Buick, and Pontiac, plans to reduce its dealer network from 5,969 stores now to about 3,600 by the end of 2010, so more dealers apparently will be contacted with bad news. In most cases, existing franchise agreements run through October 2010, GM says.

Meanwhile, Chrysler said it plans to eliminate about a quarter of its 3,200 U.S. dealerships. It produces Chrysler, Jeep, Dodge, and Mopar brand vehicles and products. The closest dealerships to Spokane included on the list of 789 dealerships set to close are in Ritzville, Wash., and Sandpoint and Moscow, Idaho.

GM didn't provide a list of dealerships with which it plans to end franchise agreements, and said in a news release, "As independently owned businesses, dealer owners will make their own decisions if and when they want to make this information public."

Camp Automotive Inc., Parkway Chevrolet Inc., Jaguar Land Rover Volvo Spokane, and Spokane Chrysler Inc. all declined to comment for this story. Representatives of other Inland Northwest dealerships, including George Gee Buick GMC Pontiac Hummer Porsche, Tom Addis Dodge, Barton Jeep, and Appleway Chevrolet couldn't be reached for comment.

Dishman Dodge's Waltermire says he doesn't think Chrysler will be naming more dealers for closure anytime soon.

"That seems to be the number they came up with," he says of the 789 dealers Chrysler said it would close. "They made their adjustments, now we can move on."

In an interview before Becker Buick found out it was part of GM's long-term plans, Cornwell said, "We feel OK, we feel comfortable, but there's still a lot of uncertainty. Even though we think we're OK, you never know what that guy in Detroit is thinking."

GM explained earlier that dealers would be evaluated based on multiple criteria, and those that succeeded by those measurements would be kept, Cornwell says. Among those criteria were customer satisfaction, based on customer surveys; financial viability; how nice their facilities are; and their "sales effectiveness," he says.

Also, Cornwell says GM views favorably the fact that Becker carries three vehicle brands, even though GM has announced it is phasing out Pontiac.

Waltermire says Chrysler was focusing on five criteria as it evaluated dealerships for potential closure, including location, facilities, sales requirements for the dealer, profitability, and customer satisfaction.

"We get a check mark in each and every one of those," he says.

Waltermire says the letter from Chrysler that arrived last Thursday was short, maybe a paragraph or two in length.

"They said they choose us, and look forward to doing business in the future," he says.

"Everybody was just kind of waiting to see who was going to make it and who wasn't," Waltermire says.

He says Dishman Dodge has benefitted to some extent in that some customers just don't know Dodge is part of Chrysler.

Plus, for those who do know, Waltermire says, "The whole bankruptcy thing hasn't really scared anyone away." Sales, he adds, "haven't really been dropping."

Dishman Dodge has sold about 30 new vehicles each month for the last nine months, Waltermire says. That number bumped up a little in April, as the dealership sold 36 new vehicles, he says. The dealership is on pace to do even better this month. Meanwhile, Dishman Dodge has been selling about 100 used vehicles per month, he says.

Cornwell says sales of new cars at Becker Buick are down about 30 percent so far this year, but adds that new-car sales can fall even in good economic times. "New-car sales is just so competitive," he says.

While new car sales are down, however, there's not a lot of profit in those sales anyway, he says. The dealership is much more profitable in its parts, service, auto-body repair, and used-car departments, Cornwell says.

"Everything except new-car sales is profitable," he says. "We have four other different entities here to rely on."

For every new car the dealership sells, it sells two-and-a-half to three used vehicles, Cornwell says.

Still, the dealership has been down in overall vehicle sales. Last year, it sold 1,079 vehicles, compared with 1,403 in 2007, he says.

"Everybody's down," he adds, "but I don't think we're down as much compared with others nationally."

Agost, the general manager at Saturn of Spokane, says that dealership is doing OK in the difficult economy and national car-sales slump. He says the dealership is watching expenses closely, though.

Like Becker Buick, the Saturn dealership continues to have success in its service, parts, auto-body repair, and used-car departments, Agost says. "Those have been shining stars," he says.

Used-car sales are off about 10 percent so far this year at Saturn of Spokane, while new-car sales are down about 60 percent, Agost says.

GM has said it still is seeking a buyer for its Saturn unit.

Agost says staff members at Saturn of Spokane have heard concerns expressed by some customers about whether the dealership would remain, asking "what's going on with Saturn and GM?"

"I tell them I have no doubt we'll be here in the future," he says. "I've been with Saturn for 19 years and I don't see anything happening."

He adds, "I'm not out looking for a job."

Still, he says, the Saturn manufacturing operation "will probably be owned by someone different, but we'll still be here selling something."

At Dishman Dodge, Waltermire says the dealership has shifted its sales focus to meet changing customer demand. For instance, two years ago, it was stocking a roughly equal number of new cars and used cars on its Spokane Valley lot. Now, the dealership keeps about three times as many used cars in inventory as it does new cars.

"The used-car market has been strong, as the new-car market has fallen off," he says. "That's the most important thing in this business, paying attention to your inventory, and having the right mix."

He adds, "It's been a challenge adjusting to the demand. You just have to find a way to clean up what you have and get the cars people want."