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GM to reveal dealership closings

Wednesday, May 13, 2009

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Matt Franklin
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MID-MICHIGAN (WJRT) -- (05/13/09)--General Motors Corp. dealerships could learn this week if they'll stay a part of the GM dealer network.

Warning letters could go out as early as Thursday. It's part of GM's plan to shrink the number of dealers by 40 percent next year.

Automotive News is reporting those affected dealers will get the news in a matter of days.

GM dealers have been bracing for the news for weeks. It's being said that those warning letters will be in the mail Thursday, and should be in dealer hands by Friday.

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Automotive News is reporting about 1,000 under-performing GM dealers will get warning letters by the end of this week that their franchise agreements will not be renewed next year.

Sources say the letters will outline how the dealerships failed to meet the automaker's expectations.

"The ones that are not meeting those targets either in sales, but also service quality as well," said Andy Borchers with Kettering University.

"Those are the dealers that are going to be getting those letters in the mail."

GM expects to cut even more dealers once the Saab, Saturn and Hummer brands are sold.

The automaker's viability plan submitted to the government calls for cutting its dealers from 6,200 down to 3,600 by next year.

GM believes it will help to cut some costs.

"Every dealer has to go to be supported by General Motors," Borchers said. "They have to train their mechanics. They have to communicate with them."

And it's expected local communities will feel the impact of the cuts.

"Many of the dealerships are special-use kind of buildings," Borchers said.

"They are not easily turned into something else. So there's an issue there, of course. The employment loss will be significant."

GM says it will not publish the names of the dealers.

Auto dealers were in Washington Wednesday to let lawmakers know these cuts are happening too fast.