GM confirmed it planned to eliminate about 1,100 dealerships on the grounds that they are less profitable and weakly capitalised by letting their franchise agreements expire between now and the end of 2010. -- PHOTO: AP
DETROIT - General Motors plans to drop about 1,600 US dealers as it struggles to slash billions of dollars in operating costs and debt ahead of an anticipated bankruptcy filing by the end of the month.
Taken together with a similar announcement by bankrupt Chrysler a day earlier, over 2,300 US auto retailers have been put on notice that they are being eliminated by the two embattled automakers.
Heavy job losses
NEW YORK - MOVES by ailing carmakers Chrysler and General Motors to slash their US dealerships will cost tens of thousands of jobs, taking a heavier toll than cuts in production, analysts say.
General Motors, the largest US automaker, said Friday it would seek to eliminate nearly 40 per cent of its US dealers, more than 2,300 sales outlets, by the end of 2010 as part of its reorganisation to avert bankruptcy.
The unprecedented closures taken under the oversight of the Obama administration's autos task force put over 100,000 jobs at risk across the United States and show the spreading economic pain from the collapse of the two Detroit-based automakers.
GM confirmed it planned to eliminate about 1,100 dealerships on the grounds that they are less profitable and weakly capitalised by letting their franchise agreements expire between now and the end of 2010.
The automaker expects to drop another 470 dealerships from cutting its Saab, Hummer and Saturn brands, said GM spokesman John McDonald. After merging remaining dealerships, the plan is for GM to cut about 2,600 showrooms, or 40 percent of its US retail network.
'We are telling them basically that you are not going to fit into the picture long term, but between now and then we will help wind the business down the best way individually with each dealer,' GM spokesman John McDonald said.
GM dealers affected by the closure plans received letters by express mail on Friday morning informing them that the automaker did not see how it could have a 'productive business relationship' after 2010.
Other GM retailers who did not receive the express mail learned that they had been spared.
'It's kind of like 'Dancing with the Stars',' said Richard Genthe, a Chevrolet dealer in Southgate, Michigan. 'You're safe. You get to go ahead into next week.'
The elimination of US dealerships and the jobs that go with them, was an anticipated, but painful, part of the US auto industry shake-up following the collapse in US auto sales to less than 10 million vehicles a year from more than 16 million just two years ago. -- REUTERS
