GM set to cut 1,200 dealers

[Turborama]

Source: Reuters

By David Bailey and Kevin Krolicki

DETROIT (Reuters) - General Motors Corp is expected to slash up to 1,200 dealers as it struggles to dramatically pare down its operations and eliminate billions of dollars of costs ahead of an anticipated bankruptcy filing by the end of this month.

GM's cuts are expected to be announced near midday on Friday and follow the announcement on Thursday that smaller rival Chrysler would eliminate almost 800 of its 3,100 dealers within the next few months.

The elimination of U.S. dealerships and the jobs that go with them, was an anticipated, but painful, part of the U.S. auto industry shake-up following the economic slowdown, global credit crunch and U.S. sales collapse to less than 10 million vehicles a year from more than 17 million.

The dealer cuts are part of GM's already announced plan to cut about 2,600 of its roughly 6,200 U.S. dealerships as it struggles to streamline costs and drop unprofitable brands that include Saab, Hummer and Saturn. Today's cuts will be in addition to dealerships that would be eliminated when it sheds those brands.

Read more: http://www.reuters.com/article/bondsNews/idUSN1538446920090515

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"GM's North American sales vice president, Mark LaNeve, is scheduled to host a conference call at noon EDT on Friday to discuss the consolidation activities."

[blue_onyx]

1. Supposedly, GM will not release a list of dealerships like Chrysler did yesterday.

"While Chrysler publicly identified its 789 dealerships slated for closure as part of a bankruptcy filing, GM is not in bankruptcy -- at least not yet -- and GM does not plan to release a list of dealerships being closed."

http://freep.com/article/20090515/BUSINESS01/905150425/GM+dealers+to+learn+fate+today

[mule_train]

2. nessessary, but psychologically devestating

when people see those closed lots everywhere

[TwixVoy]

6. Not just closed lots

this will have a ripple effect like we can't even imagine yet. All the businesses they have deals with, consumers in general, other auto makers, everyone will be hit by this.

[DemReadingDU]

9. It's going to snowball

Chrysler and GM are shutting down factories for 2 months? maybe 3? People will get unemployment, but that is not the same as having a regular paycheck. People will have less money, so won't be able to buy more stuff. This will cause a strain on other businesses & restaurants which could default.
What if these people are not hired back? Unemployment will run out, and they will use up savings (if they have any). How are all these people going to eat and pay bills if no income nor savings? Food pantries are already stretched thin. More people are going to lose health insurance and their home/apartment.

Those green shoots sprouting in the economy? They are weeds. And they are withering.

[mule_train]

10. yes, this is far from over - nt

[jdlh8894]

3. Maybe I'm stupid.....but

Aren't dealerships franchises?(Like KFC,McD's,etc.)I was under the impression that they were owned by individuals,not the Auto Maker itself.

[blue_onyx]

4. Yes, you are correct

GM is not going to resign contracts with some dealers after 2010. So these dealers won't be given GM vehicles to sell anymore. The dealers could continue to sell used vehicles or switch to another brand though.

[ayeshahaqqiqa]

5. Our local Chevy dealer also sells Nissan

and the Buick dealer long ago dropped the GM brand in favor of Toyota, which was selling a lot better for him. I'm wondering if the dealerships they are chopping are ones just sell GM products or ones that also sell Japanese/Korean models. If the latter, I could see why they aren't releasing the names.

[TwixVoy]

7. Yes they could

but you are making the false assumption things will be better by then. We are looking at a 10 year DROP in this country. Standards of living will be lower than we have seen since the great depression. Many of these dealers will find it is simply not profitable to sell another brand card and shut down anyway.

[blue_onyx]

8. I wasn't making any assumptions

I was just stating that the previous poster was correct, that the dealer owns the franchise and does have options. Of course, none of the car companies are doing well so the foreign brands probably have no need to open more dealerships. But the dealers who decide to stay open and sell used vehicles could have some success....a lot of people are buying used rather than new.