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GM Getting Ready To Cut 2600 Dealers
The next auto businesses on the chopping block will be 2,600 General Motors dealerships.
GM Chief Executive Fritz Henderson said Monday that the company would by the end of the week start notifying dealerships it wants to eliminate over the course of the next year. The company said last month that it planned to eventually eliminate 42% of its 6,250 dealer locations, which employ more than 300,000 workers among them.
On Thursday, Chrysler LLC’s announced that it is dropping nearly 800 Chrysler, Dodge and Jeep dealers, or about a quarter of its network, as part of its bankruptcy restructuring.
GM (GM, Fortune 500) is not yet in bankruptcy court, although Henderson has said such a filing is “probable.” The company has until the end of the month to win agreement from creditors, unions and dealerships on a turnaround plan or the Treasury Department, which has been bankrolling GM’s ongoing losses, has said it will force the company to file for bankruptcy.
GM, Chrysler and Detroit rival Ford Motor (F, Fortune 500) all have far larger U.S. dealer networks than their Asian rivals, a remnant to the days when the so-called Big Three dominated the market in a way they no longer do.
Many of the GM dealership cuts have been telegraphed by the company’s broader cuts in its brands.
The company intends to close about 400 Saturn dealerships as it drops its youngest brand, as well as about 200 Saab dealers, another brand the company intends to give up.
Two other GM brands on the way out, Hummer and Pontiac, face a different scenario. National Automobile Dealers Association figures show there are 18 Hummer and 39 Pontiac dealerships that don’t sell other GM brands.
