GM to Force Over 1,000 Dealers to Close

General Motors Corp. told its dealers today that it will force 1,000 to 1,200 underperforming locations to close their doors as the automaker tries to thin dealer ranks to make the remaining outlets more profitable.
By
Associated Press,

DETROIT (AP) -- General Motors Corp. told its dealers today that it will force 1,000 to 1,200 underperforming locations to close their doors as the automaker tries to thin dealer ranks to make the remaining outlets more profitable.

GM told the dealers about the plan in a video conference, according to a dealer who spoke on condition of anonymity because the video conference was private. It is part of the company's plan announced Monday to cut more than 2,600 dealers by 2010.

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The company expects to lose 500 Hummer and Saturn dealers when those brands close or are sold, and it expects 400 dealers to close voluntarily. Another 500 would be consolidated into other dealerships, according to the dealer.

GM said Monday that it also would eliminate its Pontiac brand, but there are only 27 dealers that sell just Pontiacs, according to the National Automobile Dealers Association. Most Pontiac dealers also sell Buick and GMC vehicles at the same location.

Company spokeswoman Susan Garontakos confirmed the numbers and said GM is in the process of deciding which dealers to keep based on their sales performance, capitalization, potential profitability, size, image and customer satisfaction scores.

After that, she said, the company will go market by market and determine which dealerships are not meeting the terms of their franchise agreements.

"There's a lot of things that we have to consider, but we'll have talks with those dealers that show or haven't demonstrated that they have maintained a good performance," Garontakos said.

John McEleney, chairman of the NADA, said in a written statement that GM must treat all of its dealers fairly and those that close should be compensated.

"It's not out of any fault of their own that these dealers are being forced to close their businesses," McEleney said.

He said many details were unknown about how the dealerships will be closed, but "137,330 dealership employees will lose their jobs, and state and local governments will lose an estimated $1.7 billion in sales tax revenue that would have been used for economic development in communities around the country."

GM announced Monday it plans to reduce dealerships by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605.

GM is living on $15.4 billion in government loans and faces a June 1 government deadline to complete restructuring moves, win concessions from its unions and cut its debt. If it fails to meet the deadline, it will go into Chapter 11 bankruptcy protection.

GM has decided to scrap its Pontiac brand and either sell or close Hummer, Saturn and Saab. It will focus on four core brands: Chevrolet, Cadillac, GMC and Buick.

 

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Comments (12) -

Michael Palmer posted over 3 years ago
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"and state and local governments will lose an estimated $1.7 billion in sales tax revenue that would have been used for economic development in communities around the country." This is a good example of sloppy journalism - the quote assumes that none of the people who would have bought cars from those soon to be closed dealers would buy them somewhere else. Does the author assume a sudden uptick in bicylce sales? Come on Tom, stop regurgitating press releases!
drivinitt Nickname posted over 3 years ago
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Close Hummer ! We don't need to be driving "tanks" anymore ! Remember, we're all trying to reduce our country's oil addiction. Keep or sell Saab and Saturn, those are great cars. Close Buick instead of Pontiac. Buick buyers (whoever they are - older folks I surmise) can be served by Cadillac. Pontiac's performance lines like the Solstice and G8 need to stay. And for whatever lines remain, stop making so many trucks and SUVs ! GM has a part to play in reducing our dependence on foreign oil. Educate consumers instead of catering to their selfish wants. Hasn't worked so well, has it ?
Bobby Flowers posted over 3 years ago
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I do not understand scraping Pontiac. With the G6 and even better G8 it seems Pontiac has much more to offer than Buick. Buick should be the one to go. I guess that kills any chance of a Trans Am based on the new Camaro. I believe that Buick still recall visions of grand pa.
don james posted over 3 years ago
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What gripes me about passing that propaganda on is that it is just GM rhetoric. GM wants us to know that we'll lose an awful lot of money unless we give them much MORE money. GM aspires to be a gold-plated sewer that we can throw our money down -- for our own financial good, of course! And the press is the mindless syncophant that dutifully passes lies along. Taken together, it's one big huge denial machine. How perfectly american!
1968GTO Nickname posted over 3 years ago
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The news of them shuttering Pontiac is, well, simply - sad - as is the state of the whole of GM. Pontiac represented more sedans/cars than any other part of GM - for a total of 9. They now have more trucks/SUV's in the GM lineup than they do cars, by more than double - 11 cars compared to 22 trucks/SUV's.GM will die if they continue to show the world that they build unneccessarily large trucks/SUV's. They will follow the same path just like the dinosaurs that created the oil they consume. GM needs to clean house - on their old world thinking executive team - and get some new blodd with new ideas and better understadning of what the market [today] wants. Keep this in mind - if they closed Buick then all of the old-ass GM executives would have nothing to drive - LOL. Image them driving Escalades with 22" rims - LOL!!!
Kevin Mirek posted over 3 years ago
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Two points: "GM told the dealers about the plan in a video conference, according to a dealer who spoke on condition of anonymity because the video conference was private." Well, I guess it wasn't that private. What a joke! The problem with newsletters like this one is that they create NOTHING, but rather they rip and paste the contents from (in this case) the AP. No wonder people like Harry Jessell are always screaming for "Free" content... so he can make a living while contributing nothing but his opinion. If I were AP, I'd litigate for damages.
Dan Marchese posted over 3 years ago
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If the success of Buick is truly real in China, then I believe keeping it makes sense if it helps overall, the bottom line of GM. Buick, although thought to be old, had delivered with the Skylark, etc. and has the potential to bring more younger oriented vehicles to the table. I don't think dealerships cost you money, so I am not so sure closing them makes a difference. Would you close department stores to sell more shirts in fewer stores? They're just distribution points and in this world those who operate efffectively survive. Turn-a-rounds have happend in this country and having those distribution in place already is much cheaper in the long run.
JohnH Nickname posted over 3 years ago
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While they are in the middle of downsizing, why keep GMC. There is no difference between a Chevy pickup or SUV than a GMC. Silverado equals Sierra, Tahoe/Yukon, Suburban/Yukon XL. Kill GMC while you are at it .
FuturePioneer Nickname posted over 3 years ago
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GM 2.0? Does GM have the culture and the leadership to build great products - that is the $15B question. Will GM emerge a smarter company with an understanding of what it takes to compete for the global automobile consumer- including domestically. My gut says no- but my heart hopes they can. Can GM build an IMac, Ipod and then follow it up w/ an Iphone? The point is Apple has a vision for their market space and understands how to build and control market share in a global market - GM does not. This is not merely an issue about short-term cash flow as much as it is long-term vision for market leadership. Any first year MBA student could have surmised that GM needed to streamline their product mix and distribution models- this was the easy part; now comes the hard the part.
Man4Media Nickname posted over 3 years ago
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Come on, people. GM has sat there for 30+ years expecting people to buy the same old cars. They've failed to innovate and the foreign car makers have reaped the benefits. This country desperately needs to get with energy-efficient vehicles to help prevent further ecological damage and to reduce our dependency on foreign oil. The development of "green" industry can create economic growth as well.
pontiacvibe Nickname posted over 3 years ago
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it's a shame the Pontiac Vibe will get the ax. I have had one for four years and find it is the best vehicle I have ever owned. in past years I have owned the Toyota Tercel and Camry, and Honda Accord. Believe it or not they did not come close to giving me the satisfaction that my Vibe has. I suppose it's popularity wasn' that great. An MPV is the answer for seniors as well as families and is so useful.. I feel the Buick is an expensive car and too high end for most people. I think GM will be sorry to keep such Luxury cars and stop production of the more economical lines. That is just my opinion but I have been around a long time and watch the trends. Because of the poor economical situation why do they want to sell more expensive models? It is beyond me. They are more for prestige than anything else. The Hummer was a huge mistake so dropping it is really sensible.
Ron & Anna Winship posted over 3 years ago
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GM needs to get leaner....Chevy, Buick, GMC and Cadillac.....that should be enough for most. If they are able to make a comeback.....so can Pontiac.....maybe as their first turbine car!

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