1,100 GM dealerships to close nationwide

Number of Triangle businesses affected unknown
May 15, 2009 10:22:39 AM PDT
One day after Chrysler axed about a quarter of its dealers, GM is expected to scale down its dealership force even more. General Motors North America Vice President Vehicle Sales, Service and Marketing, Mark LaNeve, says GM feels its plan is "much better" than Chrysler's.

Of GM's 6,2500 dealerships nationwide, 1,100 of those are on the chopping block. Eventually, the automaker wants to trim its force by more than 40 percent.

On a teleconference Friday, LeNeve explained that dealerships will receive a letter based on their sales. Those dealerships are considered poor performers and produce revenue below the dealers' state averages.

GM notes that 400 or 500 dealers were selling an average of 35 units per year, which is considered low. Most of the dealerships that have been notified are losing money and going out of business, he added.

About 18 percent of GM dealerships nationwide will receive one of those letters. The letters were sent out Thursday. And although LeNeve said they are not termination notices, they serve as notification of current plans. Those plans are for the dealers to discontinue sales of GM vehicles by the fourth quarter of 2010.

GM said it will not release a list of those affected.

Like Chrysler, GM ended up with a dealership network that's too large. Now that so much of that market share is being lost to foreign brands, they say their only option is to restructure.

LaNeve, said GM's "plan is quite different" than Chrysler's. He said it was a difficult process and that the company took it very seriously.

GM will follow up with the dealers in early June in order to make sure they have a plan in place to wind down their businesses.

In another week, 500 Hummer, Saturn and Saab dealerships will be contacted concerning a status update. LaNeve alluded that some of those also will have to close.

After the projected 1,100 closings and the projected additional 500, GM will have between 4,300 and 4,400 dealerships remaining nationwide. At this time, it is not clear how many in North Carolina will remain open.

GM, which is operating with $15.4 billion of government loans, has to cut debt and operating costs and present a new restructuring plan to officials by June 1. In order to avoid a government controlled bankruptcy.


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