GM cuts dealers too
General Motors has given notice to over 1100 US dealers - but there's more to comeAs forecast last week, General Motors has moved to trim its US dealer network by more than 1100 outlets. In the first step towards cut its dealer numbers by around 40 per cent, the beleaguered company will sever ties with 1124 of its almost 6000 US dealers between now and the end of 2010.
The announcement affects dealers across the continental US. In most cases the dealers will have between now and the end of 2010 to 'wind down' their operations. At that time General Motors will not renew their franchise agreements.
The dealers earmarked for culling accounted for around seven per cent of GM's US sales in 2008, according to US industry journal, Automotive News.
But the 1124 dealerships are just the first stage of the network reorganisation. In keeping with the company's 'Viability Plan', General Motors plans to reduce its network "from 5969 stores today to approximately 3600 by the end of 2010".
GM termed the first round of cuts as affecting "underperforming and very small sales volume US dealers".
The company also detailed its plans for its 470 Saturn, HUMMER and Saab dealers across the USA. In the statement issued Saturday Australian time, it said: "We will be discussing how the remaining [Saturn, HUMMER and Saab] dealers will support our retail plans going forward.
"While additional cuts will be made, we believe the vast majority, over 90 per cent, of the remaining dealers will be offered a chance to remain with GM."
Mark LaNeve, GM Vice President of Sales Service and Marketing stated: "it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient."
"GM's viability plan calls for fewer, stronger brands as well as fewer, stronger dealers," LaNeve said.
Already financed to the tune of $US15 billion of US Government funds, General Motors must complete a major restructuring plan by June 1 or be forced to follow Chrysler into a bankruptcy-style reorganisation.
Most pundits believe the court enforced restructure is now inevitable.
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