Yesterday it was Chrysler, today General Motors announced that it intends to trim it’s dealer network by nearly 20 percent:
DETROIT — General Motors is telling about 1,100 dealers on Friday that they will lose their franchises by late next year.
Unlike Chrysler, which on Thursday released a list of 789 dealers that it was cutting loose, G.M. does not plan to announce publicly the dealers that it no longer wants. Dealers whose franchises will not be renewed after October 2010 will receive a letter informing them of the decision.
“They’re dealerships that are in most cases hurting, losing money and in danger of going out of business anyway,” Mark LaNeve, G.M.’s vice president for sales, service and marketing, said in a conference call. “It’s a move that people could argue should have been taken years ago but this leadership team had no choice but to do it today.”
The 1,100 dealers to be cut represent 18 percent of G.M.’s current dealership network but just 7 percent of sales last year.
Nearly 500 of them sell fewer than 35 new G.M. vehicles a year, Mr. LaNeve said.
And that’s only the beginning:
Over all, G.M. plans to eliminate 2,369, or 40 percent, of its 5,969 dealers by the end of 2010. On Friday, G.M. revised its number of current stores down from 6,200.
In addition to the 1,100 dealers who received notices on Friday, the company expects to shed about 500 dealerships that sell only Pontiac, Saturn, Saab or Hummer, the brands it intends to sell off or close. The rest will be achieved through attrition and by consolidating multiple franchises.
“We have said from the beginning that our dealers are not a problem but an asset for General Motors,” Mr. LaNeve said in a statement. “However, it is imperative that a healthy, viable G.M. have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of G.M., including the dealer body, must get smaller and more efficient.”
This is going to hurt in the town’s where these dealerships are located, no doubt, but it’s absolutely necessary if this company is going to survive.