Tuesday, May 19, 2009

GM tells 1,100 U.S. dealers they are being dropped

Roughly 1,100 General Motors dealers in the United States were to hear Friday if the troubled automaker won't be renewing their contracts.

The dealers were to be notified by phone or courier mail of the company's plans.

The notifications will come as GM struggles to meet a June 1 deadline to complete a restructuring plan to qualify for government financial aid.

GM CEO Fritz Henderson has said that a bankruptcy protection is possible, although the company has said it would prefer to revamp its operations without having to go down that route.

GM said in late March, when it announced it was dropping the Pontiac brand, that it expected to reduce its U.S. dealer network from 6,246 in 2008 to 3,605 by the end of 2010. That is 500 more dealers, and four years sooner, than the company laid out in a February restructuring plan.

The remaining dealer cuts will come from the closure of Saturn and Hummer outlets, plus the expected voluntary closure of roughly 400 dealerships. A further 500 sales outlets will be consolidated with others.

GM Canada said at that time that it would reduce its dealer count from 709 to between 395 and 425 by the end of 2010. GM Canada is not issuing letters Friday to Canadian dealers, a company spokesman said.

GM's move to notify its U.S. dealers comes one day after Chrysler said it was cutting 789 of its 3,200 U.S. dealerships.

The number of Canadian Chrysler dealership is expecting to remain stable at roughly 450, a company spokesperson said.

With files from The Associated Press