GM will close 1100 dealerships
05-15-2009, 01:52 PM
#1
GM will close 1100 dealerships It's beginning....
http://www.foxnews.com/story/0,2933,520281,00.html
GM Begins Announcing its 1,100 Dealership Closures
Friday, May 15, 2009
Print DETROIT — GM began contacting dealers Friday morning, advising what it calls "underperforming and very small sales volume U.S. dealers" that they no longer will be part of its dealer network.
Their current agreements will terminate at the end of October of 2010, the company said. GM's cuts, combined with Chrysler's dealership closing announced Thursday, could put more than 100,000 dealership workers to the unemployment line.
GM tried to ease the dismal news, announcing that it was "not terminating any dealerships today," according to GM's vice president of sales service and marketing Mark LaNeve.
"We will be talking to all of our dealers over the next few weeks, letting them know now in the spirit of open communication, so they are advised well in advance, about our long-term plans and their role in them.
Long term, GM should have fewer, healthier dealers, maintaining GM's current high customer satisfaction ratings, with more sales per outlet."
GM spokeswoman Susan Garontakos said the company will not make public a list of dealers to be cut, leaving the decision to release information to individual business owners.
The company has scheduled a conference call for noon Friday to explain its dealer reduction strategy.
The cuts will come just a day after cross town rival Chrysler announced it was dropping 789 of its roughly 3,200 dealerships by around June 9. Both companies have too many dealerships for too few sales are slashing costs as they race to restructure.
Dealers around the country nervously awaited news Friday morning, with some saying they were in the dark about how they would be notified. In Richmond, Va., Royal Chevrolet co-owner Del Mugford was slightly relieved when he sifted through FedEx packages Friday morning and hadn't received any bad news from General Motors. But he knew his future could be determined by a phone call or a piece of mail.
"This is absolutely nerve wracking. It's like a death sentence. It's the worst feeling in the world," said Mugford, 45, who bought the dealership with his younger brother in 2002 after owning an Oldsmobile franchise down the street. GM closed its Oldsmobile line of cars in 2004.
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John Rogin, who owns a Buick dealership and GMC truck dealership in the Detroit area, was also awaiting word. But he said he's not worrying. His Buick store, he said, has been among the top 10 performers in the country for 15 years.
"I'm just selling cars. I'm still a loyalist, and for the most part a purist as far as GM goes," he said.
Many dealers, though, will fight the cuts in court, he said.
"Most of the dealer body realizes that just because you get a letter doesn't mean it's all over," he said. "This company isn't in bankruptcy."
GM's dealer cuts are part of the company's plan announced last month to cut more than 2,600 dealers by 2010. The remaining cuts will come from closed Saturn and Hummer dealers, along with 400 dealers that the company expects will close voluntarily. Another 500 would be consolidated into other dealerships.
The GM dealer cuts are likely to have a much greater impact than Chrysler's. While many Chrysler dealers also sell other brands and will stay open after losing their franchises, a large number of GM dealers sell only GM vehicles. So if their franchises are revoked, they run a greater risk of closing for good.
In both cases, the cuts will cost thousands of jobs, create holes in local tax bases, eliminate community pillars and create economic ripple effects across the country.
Chrysler is operating under bankruptcy protection, so it is likely to have an easier time tearing up its franchise agreements with its dealers than GM. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York for the judge to determine whether to approve Chrysler's motion to fire its dealers.
Chrysler executives said Thursday the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half of the dealerships being eliminated sell less than 100 vehicles per year, they said, and account for 14 percent of U.S. sales.
Chrysler has received $4 billion in government aid, while GM has received $15.4 billion. GM is continuing to restructure out of court and faces a government-imposed deadline of May 31 for doing so. Several difficult hurdles remain, and many experts say that it is all but inevitable that it will follow Chrysler into Chapter 11 bankruptcy.
To remake itself outside of court, GM must persuade its bondholders to swap $27 billion in debt for 10 percent of its risky stock. In addition, it must work out deals with its union, announce factory closures, cut or sell brands and shutter dealers.
Swapping its bond debt for equity may be its most difficult task. The company is trying to get 90 percent of its bondholders on board for the so-called debt-for-equity swap. A committee representing the bondholders has rejected the swap, saying it unfairly favors the government and the United Auto Workers union. They have counteroffered seeking a 58 percent ownership stake, which the automaker in turn rejected.
On Thursday, GM said that bankruptcy is possible if it doesn't get enough takers on the exchange. If that happens, it likely would sell most of its assets to a new company and liquidate the rest, the automaker disclosed in a regulatory filing.
The automaker also says it could seek court approval of its reorganization plan even if creditors vote against it.
Shares of GM wobbled between $1.13 and $1.16 in morning trading Friday.
The Associated Press contributed to this report.
http://www.foxnews.com/story/0,2933,520281,00.html
GM Begins Announcing its 1,100 Dealership Closures
Friday, May 15, 2009
Print DETROIT — GM began contacting dealers Friday morning, advising what it calls "underperforming and very small sales volume U.S. dealers" that they no longer will be part of its dealer network.
Their current agreements will terminate at the end of October of 2010, the company said. GM's cuts, combined with Chrysler's dealership closing announced Thursday, could put more than 100,000 dealership workers to the unemployment line.
GM tried to ease the dismal news, announcing that it was "not terminating any dealerships today," according to GM's vice president of sales service and marketing Mark LaNeve.
"We will be talking to all of our dealers over the next few weeks, letting them know now in the spirit of open communication, so they are advised well in advance, about our long-term plans and their role in them.
Long term, GM should have fewer, healthier dealers, maintaining GM's current high customer satisfaction ratings, with more sales per outlet."
GM spokeswoman Susan Garontakos said the company will not make public a list of dealers to be cut, leaving the decision to release information to individual business owners.
The company has scheduled a conference call for noon Friday to explain its dealer reduction strategy.
The cuts will come just a day after cross town rival Chrysler announced it was dropping 789 of its roughly 3,200 dealerships by around June 9. Both companies have too many dealerships for too few sales are slashing costs as they race to restructure.
Dealers around the country nervously awaited news Friday morning, with some saying they were in the dark about how they would be notified. In Richmond, Va., Royal Chevrolet co-owner Del Mugford was slightly relieved when he sifted through FedEx packages Friday morning and hadn't received any bad news from General Motors. But he knew his future could be determined by a phone call or a piece of mail.
"This is absolutely nerve wracking. It's like a death sentence. It's the worst feeling in the world," said Mugford, 45, who bought the dealership with his younger brother in 2002 after owning an Oldsmobile franchise down the street. GM closed its Oldsmobile line of cars in 2004.
Column ArchiveGM Begins Announcing its 1,100 Dealership Closures
2010 Mercedes-Benz GLK350 4Matic
Ford to Sell 300M Shares in Show of Strength
GM Posts $6 Billion Loss for First Quarter
AP: Fiat to Sign Important Chrysler Partnership Deal by Thursday
Full-page FOX Car Report Archive
John Rogin, who owns a Buick dealership and GMC truck dealership in the Detroit area, was also awaiting word. But he said he's not worrying. His Buick store, he said, has been among the top 10 performers in the country for 15 years.
"I'm just selling cars. I'm still a loyalist, and for the most part a purist as far as GM goes," he said.
Many dealers, though, will fight the cuts in court, he said.
"Most of the dealer body realizes that just because you get a letter doesn't mean it's all over," he said. "This company isn't in bankruptcy."
GM's dealer cuts are part of the company's plan announced last month to cut more than 2,600 dealers by 2010. The remaining cuts will come from closed Saturn and Hummer dealers, along with 400 dealers that the company expects will close voluntarily. Another 500 would be consolidated into other dealerships.
The GM dealer cuts are likely to have a much greater impact than Chrysler's. While many Chrysler dealers also sell other brands and will stay open after losing their franchises, a large number of GM dealers sell only GM vehicles. So if their franchises are revoked, they run a greater risk of closing for good.
In both cases, the cuts will cost thousands of jobs, create holes in local tax bases, eliminate community pillars and create economic ripple effects across the country.
Chrysler is operating under bankruptcy protection, so it is likely to have an easier time tearing up its franchise agreements with its dealers than GM. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York for the judge to determine whether to approve Chrysler's motion to fire its dealers.
Chrysler executives said Thursday the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half of the dealerships being eliminated sell less than 100 vehicles per year, they said, and account for 14 percent of U.S. sales.
Chrysler has received $4 billion in government aid, while GM has received $15.4 billion. GM is continuing to restructure out of court and faces a government-imposed deadline of May 31 for doing so. Several difficult hurdles remain, and many experts say that it is all but inevitable that it will follow Chrysler into Chapter 11 bankruptcy.
To remake itself outside of court, GM must persuade its bondholders to swap $27 billion in debt for 10 percent of its risky stock. In addition, it must work out deals with its union, announce factory closures, cut or sell brands and shutter dealers.
Swapping its bond debt for equity may be its most difficult task. The company is trying to get 90 percent of its bondholders on board for the so-called debt-for-equity swap. A committee representing the bondholders has rejected the swap, saying it unfairly favors the government and the United Auto Workers union. They have counteroffered seeking a 58 percent ownership stake, which the automaker in turn rejected.
On Thursday, GM said that bankruptcy is possible if it doesn't get enough takers on the exchange. If that happens, it likely would sell most of its assets to a new company and liquidate the rest, the automaker disclosed in a regulatory filing.
The automaker also says it could seek court approval of its reorganization plan even if creditors vote against it.
Shares of GM wobbled between $1.13 and $1.16 in morning trading Friday.
The Associated Press contributed to this report.
05-16-2009, 10:01 AM
#7
I read that some of the Mopar dealers that got the ax were only doing 40 units A YEAR!!!!
They NEED to be closed!!!
I have 4 local Mopar dealers and 3 survived the cut... The 4th only sold Jeep and I don't believe their sales numbers were very good...
There are many small GM stores around the country....
I think the formula is.... If your store shows NET profitability (sales/service combined) and you're not too close to another profitable store... your chances are good...
Anybody got that list????
Please post it up. Thanks!
They NEED to be closed!!!
I have 4 local Mopar dealers and 3 survived the cut... The 4th only sold Jeep and I don't believe their sales numbers were very good...
There are many small GM stores around the country....
I think the formula is.... If your store shows NET profitability (sales/service combined) and you're not too close to another profitable store... your chances are good...
Anybody got that list????
Please post it up. Thanks!
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05-16-2009, 11:03 AM
#8
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From what I understand, some dealers may not be "closed" per say, but their contracts with GM and Chrysler canceled. If that's the case, some struggling dealers may look into used cars and imports.
Also, advertisement budgets are said to be getting cut big time.
Also, advertisement budgets are said to be getting cut big time.
05-16-2009, 11:37 AM
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My understanding most of those will be Pontiac/Saturn dealers seeming both brands are dead (or soon to be for Saturn) Then the rest will be chevy. I hope the one next to me does not close...
05-18-2009, 03:20 PM
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most people dont realize but gm doesnt lose any money on the dealers,the dealers pay for EVERYTHING from the damn sales brochures, to training, special tools etc.Gm has been running with there heads up there asses for the last 20 years.
05-18-2009, 04:49 PM
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I hope they close down the chevrolet dealer by my house. Place is the biggest sh* t in the world. Service department is horrible, and even with their vast amount of inventory they will try and rip you off as if GM was still above water.
-Joel
-Joel
05-18-2009, 06:00 PM
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it's pretty pathetic when GM dealers are competing with OTHER GM dealers to sell cars...there once was a time when they competed with ford and chrylser dealerships. i say bring on the shut-downs 
...and this is what they get for allowing the government to interfere. This WAS a capitalist society, and a free-market economy too. The government has no right to bail anyone out. they should have just gone out of business. it's not like someone else wouldn't have stepped up and taken over, and then the taxpayers wouldn't be shelling out the money to keep them afloat.
...and this is what they get for allowing the government to interfere. This WAS a capitalist society, and a free-market economy too. The government has no right to bail anyone out. they should have just gone out of business. it's not like someone else wouldn't have stepped up and taken over, and then the taxpayers wouldn't be shelling out the money to keep them afloat.
05-18-2009, 07:05 PM
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GM dealers (and GM's own brands) have been cannabalizing each other since the 1970s. GM just doesn't have the customer base to support itself, it's employees, brands, plants and dealer network anymore.
05-18-2009, 11:25 PM
#16
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...and this is what they get for allowing the government to interfere. This WAS a capitalist society, and a free-market economy too. The government has no right to bail anyone out. they should have just gone out of business. it's not like someone else wouldn't have stepped up and taken over, and then the taxpayers wouldn't be shelling out the money to keep them afloat.
Whom else do you think could have stepped in??? Bill Gates, Warren Buffet.... neither have the $$$$$ alone or combined that would have been necessary.... and there certainly wasn't any banking institution willing to take on such a large risk. There was NO ONE else that could have stepped in.
As for the cost of the auto bailout.... the entire idea of the bailout was that it was cheaper to bail them out then let them fail.
I'd said the entire time that these loans would NEVER be repaid... Simply too much debit..... they would become little more than subsidies to the US Auto industry.(Ford will no doubt soon be at the bailout trough if the economy doesn't turn around soon. Which currently shows little to no progress.)
If you are worried over the Auto bailout loans not being repaid.... better start worrying about the loans made to AIG, GE, BOA, ect..... most of these loans won't be repaid either.
