GM culls 1,100 dealers across US

[mcnews]

GM culls 1,100 dealers across US
By Washington correspondent Kim Landers and wires

Posted 47 minutes ago

The troubled US car giant General Motors says it will cut nearly 40 per cent of its dealers as part of its reorganisation plans as it struggles to avoid bankruptcy.

General Motors has almost 6,000 dealers across the United States.

It has started notifying 1,100 of what it calls "underperforming and small sales" dealers that their franchises will be terminated late next year.

GM plans to scrap almost 2,300 dealers.

The announcement comes one day after Chrysler asked a bankruptcy court judge to shut down almost 800 of its dealers.

General Motors has until June 1 to complete a major restructuring plan or be forced into bankruptcy too.

GM vice president Mark LaNeve said many of the dealers notified this week were selling 35 or fewer vehicles per year.

Additionally, GM said it would also likely sever ties with about 470 Saturn, Hummer and Saab dealers as it sheds those brands.

"We have said from the beginning that our dealers are not a problem but an asset for General Motors," said Mr LaNeve.

"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."

Mr LaNeve told a conference call that although GM does not incur direct costs from the dealers, the sales outlets must be able to invest in the brand to keep GM viable.

If dealers only sell a small number of cars, "over time they can't afford to invest in their business to the degree their competition can," Mr LaNeve said.

The reduction of the dealer network is one step in the deep restructuring GM is trying to undertake.

Mr LaNeve says it still must win additional concessions from bondholders and its main labor union to implement the plan.

- ABC/AFP