General Motors has told US dealers it is speeding up its timetable for closing about 1,700 outlets as it hurries to meet the Obama administration’s 1 June restructuring deadline, people with knowledge of the discussions have said.
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GM executives also said about 200 dealerships had closed in the first quarter, sources told Reuters.
Dealer representatives met on Tuesday in Detroit with new GM CEO Fritz Henderson and on Wednesday with GM sales chief Mark LaNeve, the news agency said.
According to the report, GM had over 6,200 dealers in the US at the end of last year and had presented a plan to the administration’s autos task force that would have cut that by about a quarter to about 4,100 over the next five years as dealers shut down or merged.
But the task force rejected the consolidation plan and told the automaker to go to speed up dealer consolidation by not relying on attrition alone, the sources said.
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By GlobalDataAs a result, GM officials have told dealers that they would identify poorly performing locations and could move to terminate franchise agreements by 1 June , a dealer who had received such a notice told Reuters yesterday.
The dealer added that GM was counting on the spin-off or closure of its Saturn and Hummer brands – combined with dealership closures because of declining business conditions and tight credit – to deliver about half of its targeted cuts.
GM reportedly is preparing to terminate franchise agreements without the kind of payouts that it made when it shut down its Oldsmobile division and closed about 2,800s in a process that cost it over $1bn.
The news agency said dealer representatives, including the key NADA trade group, had met at least four times with members of the autos task force since last month, including discussions of the financing pressure on both dealers and potential car buyers.
A GM spokesman confirmed the meetings had taken place but declined to comment to Reuters on the closed door discussions.
GM dealers who met in Detroit this week were also told that the automaker has several interested potential investors in the troubled Hummer SUV brand and expected to have an offer that would keep the brand running, one source told Reuters.
Henderson had said late last month that a decision on Hummer could come within weeks.
Sources also told the news agency that Chrysler executives, including sales chief Jim Press, held a conference call for dealers on Tuesday and met with key dealers on Wednesday.
“The message was that all the balls are in the air, but they were committed to trying to reach a deal with Fiat,” one dealer said.
