GM Moves to Close 1,700 Dealerships Quickly

Posted: Apr 17, 2009 09:34 a.m.

Facing Obama administration demands that it move quickly to restructure, General Motors is apparently speeding plans to drastically trim its dealership network.

Reuters reports, "General Motors Corp has told U.S. dealers it is accelerating its timetable for closing about 1,700 dealerships as it rushes to meet a June 1 deadline to restructure under U.S. government oversight, people with knowledge of the discussions said." 

General Motors currently supports more than 6,200 dealerships in the United States.  Rival Toyota, which has sold a similar number of cars to GM each of the past three years, has fewer than 2,000. 

Reuters reports, "GM is counting on the spin-off or closure of its Saturn and Hummer brands -- combined with dealership closures because of declining business conditions and tight credit -- to deliver about half of its targeted cuts. ... For the remainder, GM is preparing to terminate franchise agreements without the kind of payouts that it made when it shut down its Oldsmobile division and closed some 2,800 dealerships."

Autoblog, however, reports that "GM is doing so with a different payment scale than it had when it closed down the 2,800 Oldsmobile dealerships, which ran up a tab of $1 billion."   Details of the payment scale GM plans to use in its latest round of closures, however, were not available.

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