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GM Drops Ax On 1,100 Dealerships


gmc.jpgGeneral Motors began notifying 1,100 dealerships Friday that their franchises would not be renewed as the company also revealed it likely would sell most of its assets to a new company and liquidate the rest if it has to seek bankruptcy protection.

Dealers were to find out either by telephone or FedEx letters.

The move comes a day after Chrysler LLC told 789 of the company’s roughly 3,200 dealers across the country that they would be shutting their doors.

GM spokeswoman Susan Garontakos said the company will not make public a list of dealers to be cut, leaving the decision to release information to individual business owners.

The dealerships notified will have until October 2010 to close out their businesses.

Those dealers, which the company considers under-performing, will eventually be joined by dealers of brands GM is shedding. Stand-alone Pontiac dealers will be phased out while sellers of Saabs, Saturns and Hummers will have to wait to find out if their brands have a future.

The company has scheduled a conference call for noon Friday to explain its dealer reduction strategy.

The GM dealer cuts are likely to have a much greater impact than Chrysler’s. While many Chrysler dealers also sell other brands and will stay open after losing their franchises, a large number of GM dealers sell only GM vehicles. So if their franchises are revoked, they run a greater risk of closing for good.

In both cases, the cuts will cost thousands of jobs, create holes in local tax bases, eliminate community pillars and create economic ripple effects across the country.

Chrysler is operating under bankruptcy protection, so it is likely to have an easier time tearing up its franchise agreements with its dealers than GM. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York for the judge to determine whether to approve Chrysler’s motion to fire its dealers.

(Source: WCBSTV)



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