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GM spokeswoman Susan Garontakos said that the dealers receiving notice Friday are being told that their contracts will not be renewed in October Many of them are expected to close shop this year. The company is likely to cut another and eventually get its network down to between 3, and 4, dealers by next year, GM vice president Mark LaNeve said. Another dealers will be eliminated in a second cut as GM continues to restructure.
On top of the dealers GM is cutting, LaNeve said another will be lost through attrition and consolidation.
Some will decide to move away from selling GM brands and others will decline to meet the automakers' requirements for additional investment in their facilities. The company's expectation is that the surviving dealerships will become larger and more profitable as a result of the thinning out, which in turn will allow them to spend more on advertising and facilities. But GM also acknowledges that its long-term decline in U. Between and of the dealers notified Friday sold an average of only 35 vehicles a year, or about three a month.
The rest of the dealers on the list also had very low average sales by industry standards - only about five or six vehicles a week. Business failures and purchases of dealerships by larger dealers has already shaved GM's dealership ranks by about this year, Garontakos said.
GM will be facing a serious problem if the majority of the dealers decide to quit the business in the near term. That's because under their contracts, GM would then be required to repurchase the 65, cars they have in their collective inventory.
The move comes a day after Chrysler LLC announced that it is dropping nearly Chrysler, Dodge and Jeep dealers, or about a quarter of its network, as part of its bankruptcy restructuring. The Chrysler dealerships agreements will be terminated around June 9, assuming the move is approved by the bankruptcy court.
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