GM To Cancel 1,100 Dealer Contracts

Today, GM will announce the start of a major plan to trim its dealer network of some 2,400 stores over two years. The first cuts will come today when about 1,100 stores are expected to receive word that GM will not renew their franchise contracts after October 2010.

Yesterday, Chrysler alerted 789 of its franchises that they would be terminated. Many of those stores sell other brands and will continue to operate. Analysts say, however, that the GM network doesn't operate in the same way, and the majority of the affected dealers will likely go out of business.

While GM says these stores could operate through spring of 2010, it’s possible they could go out of business long before their contracts expire.

According to the National Automotive Dealer Association, the average number of employees at a GM dealership is 52.

GM will announce its formal plans later today. 

Comments

GM became a monster in the 60's and 70's. In the 80's and 90's they opened WAY too many stores and let the competition of dealers slashing profits for market share begin. Now GM is feeling the pain that corporate greed can inflict.

When I as a taxpayer have to pay for someones mistakes, I tend not to buy their product. GM made huge amonts of profits over the last 30 years and squandered it by getting into the housing market. Now that the housing market has fallen, they want to government to bail them out with no repercussions. They should have to file banrupcy and restructure their assets, reorganize, or find a buyer who can run a business in these leaner times.

The Japaneese car makers have plants in America that have been building cars for years now. They aren't hurting as badly as the domestic cars are...Why? Because they are not union plants. The unions saved the middle class in the 20's and through the 60's. In the 70's they got greedy and started to demand huge and rediculous contrats that paid them when a plant became idle for too long. How dumb can you be? When I don't work, I don't get paid. Most people don't. When they retire, they get a pension that makes the military look bad. GM, instead of allowing a strike to occur, cowed down to the UAW. Now the UAW is willing to take some concessions in order to remain at work. Had GM put money aside AND began to make cars that didn't die after 5 years back in the 80's, they would not be in the situation they find themselves in right now.

Chrysler on the other hand deserves to die. They hire a guy in Bob Nardelli who's claim to fame is that he was able to cut the stock value of THE largest home remodeling store chain in half over a 3 year period. This is beyond stupid and they will die as a result of his continued failure.

nardelli got 200 million to go away and then soon after that he got to chrysler. unless home depot problems weren't his, don't know what chrysler was thinking.

Chrysler didn't hire Nardelli, Cerberus did. Nardelli is an employee of Cerberus not Chrysler.

I agree with Mr. Donley that the Big three should have corrected there financial situation much earlier. I guess that is were greed and common sense do not cross paths.

I, however, do not think getting rid of dealers will stop the price slashing. Everyone does it now-a-days from Televisions to DVDs. That’s the American way. Just look at all the big box home improvement stores that advertise – We'll beat any competitors advertised price by 10%, etc.

Also I have always wondered how the big three could afford to pay the union workers those high wages and give them such great benefits and yet be profitable.

I do feel bad for all those communities that may loose so many jobs with closing of dealers. I wish them and their families luck.

Seems not many media outlets are talking much about the economic impact to the communities that looses dealers. Saw another interesting article regarding this at http://franksreviews.com/are-gm-chrysler-killing-your-community. Seems everyone focuses on the big three and forgets about the workers at the plants that are closing and the people that will loose their jobs at the dealerships.

M. Lowery