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GM Advises Approximately 1,100 Dealers of No Long-Term Future in GM Dealer Network

GM began contacting its dealers today regarding its long term planning, and is advising approximately 1,100 “underperforming and very small sales volume US dealers” that GM does not see them as part of its dealer network on a long-term basis. In most cases, existing franchise agreements run through October of 2010.

In its recent S-4 filing and updated Viability Plan (earlier post), General Motors said it will reduce its dealer network from 5,969 stores today to approximately 3,600 by the end of 2010.

In a statement issued today, GM also said that it will be updating about 470 Saturn, HUMMER and Saab dealers on the status of those brands and will be discussing how the remaining dealers will support our retail plans going forward.

The actual number of dealers could vary given levels of attrition, etc. outside of GM’s control.

We have said from the beginning that our dealers are not a problem but an asset for General Motors. However it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient.

In response, we are letting them know about our long term plans. GM’s viability plan calls for fewer, stronger brands as well as fewer, stronger dealers. We have taken a very difficult step by identifying those dealerships we’d like to keep in the GM dealer network and those with whom we will have to wind down our business relationships.

—Mark LaNeve, GM Vice President of Sales Service and Marketing

As independently owned businesses, dealer owners will make their own decisions if and when they want to make this information public. GM is not releasing the names of any dealers.

Yesterday, Chrysler LLC said it will cut 789 (25%) of its 3,181 dealerships in the US, subject to approval by the US Bankruptcy Court. (Earlier post.)

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