GMC Announces 1,100 Dealership Terminations Nationwide

The dealerships have an opportunity to appeal the decisions to General Motors.

Courtesy: ensight.com

(SALEM, Ore.) - It was announced today that General Motors Corporation is likely on the verge of filing bankruptcy. GM is now telling eleven hundred dealerships described by the company as "underperforming" - that they will be terminated as the automaker watches its retail end take a serious turn for the worse.

Those closures are expected to take place in October 2010; Bloomberg quotes the Detroit-based GM organization saying that no closures are taking place at this time.

As in the case of the Chrysler Corporation which announced almost 800 dealership closures, the named locations will have until the end of the month to launch appeals. (see: Chrysler Plans to Close Almost 800 Dealerships - Salem-News.com)

The announced closures mark the largest U.S. automaker’s first step to pare domestic dealers to a range of 3,600 to 4,000 from 5,969 by the end of 2010. With fewer retailers, the survivors may each be able to sell more cars at higher prices, boosting profit.

"It’s a cruel day, but it’s one of the casualties of the situation," CSM Worldwide Inc. analyst Mike Robinet told Bloomberg.

"Dealer consolidation is a fairly substantial reason that Chrysler had to go into bankruptcy and a very good reason why GM will need to go in as well."

In a letter to dealers, GM told stated that specific closures were determined by benchmarks that included sales volume and customer feedback. They also considered capitalization, profitability and pairings with competing brands, Bloomberg reported.