Saturday, May 16, 2009

GM to Cut 1100 Dealers

Posted in: Dealers, Financial

GM has 15 days to meet a government deadline to successfully restructure or else enter bankruptcy restructuring proceedings. Chrysler has already been in bankruptcy court since May 1st.

A major element of restructuring for both companies is the ability to eliminate excess dealerships. Maintaining too many dealers in a much smaller market than it used to be is a major expense.

Yesterday Chrysler announced a cut of 789 dealers, leading to shock and sadness across the country. Not only because of loss of jobs and revenue, but car dealers are often important community members and sponsors of local activities.

Starting today 1124 GM dealers will get their pink slips. This represents 18% of the total GM dealerships. Those getting letters will be told their contracts which expire in October 2010 shall not be renewed. They are ones considered to be underperformers.

GM actually plans to eliminate 42% of total dealerships to a goal of 3605 by the end of next year. As GM is not currently in bankruptcy they do not have to publicly announce which dealerships will be receiving letters. Chrysler’s list is published below.

“We have said from the beginning that our dealers are not a problem but an asset for General Motors,” said Mark LaNeve, GM Vice President of Sales Service and Marketing. “However it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient.”

Most recently GM CEO Fritz Henderson has said GM bankruptcy is probable. However it is expected the bankruptcy process will allow GM to successfully restructure its debt and expenses and survive as a lean green reinvention of itself.

Either way Volt will survive, only the dealer you might be hoping to get it from right now may not be there in November 2010.

List of Chrysler Dealers

Source (Detroit Free Press)

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