GM, Chrysler Finishing Dealer Cut List
May 11 2009 - 11:04AM
Dow Jones News
DETROIT (Dow Jones) -- Thousands of General Motors Corp. (GM)
and Chrysler LLC dealers may learn their fate within the next few
days as both auto makers finish the list of the dealerships they
plan to cut.
GM dealers will be notified some time this week as to whether
they will continue to receive new cars and trucks from the auto
maker, GM Chief Executive Officer Fritz Henderson said Monday.
Henderson said he expects to "wind down"' most of the targeted
dealerships during the year.
Chrysler, meanwhile, is also expected to file its list of
dealers it plans to cut with a U.S. bankruptcy court. The
third-largest auto maker filed for bankruptcy April 30 after
failing to win concessions from its creditors. GM is trying to
avoid a bankruptcy filing and must institute a variety of cost
reductions, such as consolidating its dealer network, by June
1.
GM is planning to close 2,600 of its 6,246 dealers while
Chrysler is looking to shrink its network from 3,188.
"It's too early in the process to comment," said Chrysler
spokeswoman Carrie McElwee said. "When we have information we can
share, we will communicate that information directly to our
dealers. "
U.S. auto makers have been handicapped by their large dealer
networks. The size has fostered price in-fighting between dealers
serving the same market while also allowing weaker locations to
continue operating by offering bigger incentives on their
inventory.
Foreign auto makers, such as Toyota Motor Co., have controlled
their networks, giving dealers larger markets and quickly ridding
themselves of weaker locations when needed.
-By Jeff Bennett and Sharon Terlep; Dow Jones Newswires;
jeff.bennett@dowjones.com; 248-204-5542