GM Expects To Lose 500 US Dealerships

Jan. 12 (Bloomberg) -- General Motors Corp. said it may lose as many as 500 dealers in its home market this year, an increase from 350 last year, as the largest U.S. automaker works toward a goal of cutting 1,700 by 2012.

The reduction will widen in part because of the strain of a fourth straight year of U.S. auto-sales declines and a company initiative to trim brands and emphasize only Chevrolet, Cadillac, GMC and Buick, GM North American President Mark LaNeve said in an interview today. GM may also have to spend more to convince some of its 6,400 dealers to consolidate, he said.

Culling dealerships and brands is part of GM's plan that also includes trimming labor and debt costs to convince the U.S. Treasury Department that the Detroit-based automaker can survive and repay $13.4 billion in promised federal loans. GM has said it will fail without government loans.

Read the whole story here.

Comments

[DFL]

GOP DEPRESSION #2, SEE NEO CONS WHAT HAPPENS WHEN YOU HURT THE MIDDLE CLASS, NOW LOOK AT THE HOLE THE WORLD ECONOMY IS IN!

[readmewell22]

Greatest Recession..... or the beginning of a 2nd GREAT DEPRESSION!!
Take your pick!! Both suck!!!

[mrcontinental]

What will all of these con men do for employment? And what about the strip clubs?

[Ozarks]

GM's $35k to $40k Volt shows they still have no idea about the market. They will go into the toilet when the bail out money runs out in March.

[mrcontinental]

Yep.

[JoeBlough]

Why can't we buy a GM automobile through Amazon.com? I'd rather pick the one I want, order it and have it delivered to me, with no sales tax and free shipping, then deal with car salesmen.

[KillTheMessenger]

That's why the car salesmen have made Congress make a law that forbids car sales on Amazon.com.

:-)

[drymartini1]

I hate car salesmen more than Huffpo readers hate investment bankers LOL. hopefully all these damn dealerships go outta business

[KillTheMessenger]

Too little, too late.

[mountainweb]

Is closing dealerships bad, yes, but you cannot expect the American tax payer to pay people to sit on the butts. The management of GM is to blame for having bad union contracts and way too many dealerships to support a declining market. Yes, its going to be ugly but someone has to pay for the results of bad management and worthless boards that never did anything to protect the stockholders. Obama may see this named the "Obama depression" as the democratic party now works to undermine all the promises he made during the campaign.

[rollingdivision]

Good, GM in particular has way too many dealerships, a leftover from the fat times.

[Grousefeather]

GM will gleefully shed small, mostly rural, dealers because they're too expensive to service and maintain. That means only large volume well financed conglomerates will prevail and mom and pop dealerships will go the way of independent drug and hardware stores. GM has been looking for a way to dump small dealers for years, but small dealers have contracts that have protected them from being arbitrarily abandoned. So, not only does GM get a get a great big financial bailout, they also have an excuse to restructure their dealership network to push out the little guy and reward big money investors with lucrative multiple franchises. Watch how many former GM executives end up with financial interests, if not outright ownership, in the new highly lucrative franchise system, financed of course by the public through "government" bailouts.

[drymartini1]

having way too many dealerships is a recipe for disaseter !!...shed 40% of the dealerships and the remaining ones will do well.

[Trittydi]

My brother was a top mechanic for a Dodge/Chrysler dealer in Northern Illinois. They closed their doors for good about a month and a half ago. GM called in the debt of the outstanding inventory of the lot - something manufactures never do - they needed the cash. Instead - it closed down the dealership. That's not how the dealerships and maker have historically done business. Without the cash on hand to pay for the inventory - they had to close. That'll be happening in communities all across the country. >POOF!< -- more jobs gone.
*

[GaBu]

What does GM have to do with Dodge/Chrysler?

[ratcityreprobate]

GMAC has been financing a lot of Chrysler dealers. Something I learned recently.

[drymartini1]

now govt. gotta save dealership jobs ? LOL

[AZdesertdog]

always interesting to read yet another article written by somone wtihout any knowledge of the car business.

always good reading about GMAC's "bad credit decisions". oh really? their rate of reposession has never been higher than any other finance company, so I doubt that is even an issue. shall we forget that other captive finance companies like Toyota Motor Credit (and their Lexus division), Nissan Motor Acceptance (and their Inifiniti division), BMW Financial Services, and Mercedes Benz Credit Corp. all finance purchases all the way back to a 600 FICO score, with GM's minimum being 621? using this silly the silly theory put forth by the author, who now is being "irresponsible?"

many here act as though a celebration should occur with each dealership closing. in all of their childishness, they forget this puts hundreds of thousands out of work. it also forces many people to drive for 50-100 miles just for a new car or even service. this is great, right?

we'll see how much joy they have when their beloved Toyota or Honda dealer goes under. they are hurting just as badly, and many are being crushed under the tremendous debt load of those "masoleum" dealerships the manufacturers forced them to build.

[JeffersonState]

I simply cannot understand the glee many people are showing at the demise of the auto industry.

There is an old saying "as the auto industry goes, so goes the economy".

[KillTheMessenger]

That "old saying" was made up by GM marketing about three months ago.

[ratcityreprobate]

Wasn't it "Engine" Charlie Wilson who said, "What's good for GM is good for America" in the 1950's?

[drymartini1]

i might rag on GM but at least I never say that Toyota giving credit to 620 credit score people is a wise decision.

To ALL car dealers,

NO CREDIT BELOW 700 SCORE. maybe people driving new car every years is the problem. maybe people below 700 should be driving used cars instead...ever think about that.

people have an entitlement mentality here. if your score is below a threshold, maybe you should be saving more. buying used cars instead of new cars.

[blooddoc]

The vast majority of people walking into a dealership looking for a new car have one thing on their mind: what's my monthly payment going to be? Not what 's the price of the car, or what's the interest rate, or what's the duration of the loan, or what's my trade-in worth. That sort of short-term thinking is in large part what got us into the financial mess we're in right now. Dealers have offered 72-month, even 84-month loan terms, which is patently ridiculous because the owner will be upside-down on the car before the loan term is even half up. Dealers have brought some of this misery on themselves, but in the end closing the small rural dealers won't help anything but the corporation's bottom line.

[JoeBlough]

Does anyone really have a beloved dealership? Too much emotional involvement.

[Fabini]

My concern is the shift for GMAC into banking. Is this really a good idea for consumers? Would you move your savings and checking accounts into GMAC?

[JScott]

I googled Ostrom Chevrolet in Montebello Ca. don't seem to be any stories about it closing, wonder if they think their pic on this post is misleading. Hope Felix Chevrolet in LA doesn't, they have that iconic sign of Felix the Cat.

[JScott]

And all those Ca. cities who decided to develop 'auto malls' as their next revenue generators,
now where are they?

[sonoffestus]

Chryslers.....aren't they pulled by horses?

[Fabini]

Yes they are and that has supported the harness and pop-scooper industries for decades.