1100 GM Dealers To Lose Their Franchises

Thursday, Chrysler released a list of 789 dealers that it was letting go. Today, G.M. will send the letters to 1100 dealers with the bad news that their franchises will not be renewed after October 2010.

chrysler_dealer500According to the New York Times:

Over all, G.M. plans to eliminate 2,369, or 40 percent, of its 5,969 dealers by the end of 2010. G.M. on Friday revised its number of current stores down from 6,200. In addition to the cuts being revealed Friday, the company expects to shed about 500 dealers that sell only Pontiac, Saturn, Saab or Hummer, the brands it intends to sell off or close. The rest will be achieved through attrition and by consolidating multiple franchises… G.M. and Chrysler say they need drastically fewer dealerships to become more efficient and profitable, and so the remaining dealers can make enough money in what has become a much smaller industry. Even after the cuts, their dealership networks will still be several times larger than those of foreign competitors like Toyota and Honda.

Chrysler is in bankruptcy;  G.M. is not.

Chrysler is asking its bankruptcy judge to terminate the agreements with its unwanted dealers as of about June 9. Because G.M. has not filed for bankruptcy protection it has to wait for its dealer agreements to expire or else it will have to pay expensive buyouts of the dealer agreements.  The times article points out that may change:

…many analysts expect G.M. to file for bankruptcy by June 1, the Obama administration’s restructuring deadline, and at that point the company could start trying to cancel franchises and shorten the time frame for the cuts. As of now, G.M. plans to buy back inventory, parts and specialized tools from the dealers it has deemed “underperforming.” Chrysler has offered to help its castoffs resell their inventory to other stores but says bankruptcy absolves the company of any obligation to take back the 44,000 unsold vehicles filling their lots.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Pictured above:  The Folsom Lake Chrysler Jeep dealership in Folsom Auto Mall which closed it’s doors last week has no tresspassing and other signs representing the closure. Photo taken Thursday May 14, 2009. (Credit Image: © Sacramento Bee/ZUMA Press)

Post from: Franchise Pick