General Motors says good-bye to 1,100 Dealers
General Motors (NYSE:GM) notified 1,100 of its 6,000 dealerships Friday that it is terminating their contracts with the struggling automaker, the first step in cutting up to 40% of its retail network.
General Motor shares finished the day down 5% at $1.09. GM spokeswoman Susan Garontakos said that the dealers receiving notice Friday are being told that their contracts will not be renewed in October 2010. Many of them are expected to close shop this year.
The company is likely to cut another 900 and eventually get its network down to between 3,600 and 4,000 dealers by next year, GM vice president Mark LaNeve said.
Of the 900, about 500 will come from GM's plans to sell or close four brands - Saturn, Hummer, Saab and Pontiac. Another 400 dealers will be eliminated in a second cut as GM continues to restructure.
On top of the dealers GM is cutting, LaNeve said another 400 will be lost through attrition and consolidation. Some will decide to move away from selling GM brands and others will decline to meet the automakers' requirements for additional investment in their facilities.