GM Cutting 1,100 Dealers--Is Yours One?

May 15, 2009

GM's plan to cut the numbers of dealers that sell its vehicles is in motion, as the company outlined its next step in restructuring.

General Motors executives said that the company would shrink its total number of dealers from 5,969 stores with GM vehicles today, to about 3,600 outlets at the end of 2010.

The number includes a roster of approximately 1,100 dealers notified today that their stores were not among those that GM sees "as part of its dealer network on a long-term basis." GM has contracts in place that commit most of those dealers new vehicles through October 2010. The dealers being separated from GM are "underperforming" and generate "very small sales volumes," according to a release from the company. GM is hesitating in calling today's action a "termination," but says it will engage in discussions with affected dealers as it tries to fend off lawsuits that would slow or stop the cuts to its dealer network.

Another 470 dealers are affected by GM's decision to shut down or sell its Saturn, Saab and HUMMER brands. Those dealers are in limbo until GM announces the fate of the brands. HUMMER's sale is expected by summer; there's no official word on Saturn or Saab's future, other than suggestions the brands could be sold off or involved in a complex shuffling of global car brands involving Italy's Fiat Group.

Earlier this week Chrysler informed 789 dealers that it would end their agreements as that company makes its way through the initial stages of a Chapter 11 bankruptcy proceeding. Chrysler has more leverage in bankruptcy to end dealer agreements, but some stores are threatening legal action to prevent a loss of new products for their showrooms.

Mark LaNeve, GM's vice president for marketing and sales, called GM's dealers "not a problem, but an asset," while delivering the message. Detroit's newspapers report the dealers in question were notified this morning by telephone or Fedex.

For car shoppers, the effects of the closures will be more from a community perspective than a consumer perspective. GM operates multiple dealers in many large cities, and the surviving dealers may end up becoming more profitable--but the closures will result in job losses and empty showroom buildings at the very least.

GM declined to publish a list of affected dealers.

For more on the GM restructuring, follow our General Motors tag.

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