General Motors on Friday (15 May) confirmed it would reduce its dealer network from 5,969 now to about 3,600 by the end of 2010, as noted in its recent S-4 filing and updated viability plan, but insisted no outlets would be sacked today.

"This process starts today, as GM begins contacting dealers regarding its long term planning," the automaker said in a statement. "Approximately 1,100 underperforming and very small sales volume US dealers will be advised 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 2010."

GM said it would update about 470 Saturn, Hummer and Saab dealers on the status of those brands and would also discuss "how the remaining dealers will support our retail plans going forward".

"While additional cuts will be made, we believe the vast majority, over 90%, of the remaining dealers will be offered a chance to remain with GM.

"However, specific dealer issues, further attrition and additional possible dealer network actions are expected to bring the number of future GM dealers to around 3,600 by the end of 2010, as described in the plan. The actual number 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," said the automaker's head of sales, service and marketing Mark 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 [the company], including the dealer body, must get smaller and more efficient.

"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," LaNeve added.

GM said it would not release the names of any dealers, leaving it up to the owners of what it called "independent" businesses.

"We are not terminating any dealerships today," LaNeve insisted. "We will be talking to all of our dealers over the next few weeks, letting them know now in the spirit of open communication, so they are advised well in advance, about our long-term plans and their role in them.

"Long term, GM should have fewer, healthier dealers, maintaining [our] current high customer satisfaction ratings, with more sales per outlet."