GM to compensate closed dealerships only for parts and inventory.

[kostby]

Quote, originally posted by Automotive News, as reported on Automobile.com »As GM is preparing to close thousands of dealerships as part of its restructuring plan, executives from the automaker have begun detailing how it will honor franchise agreements.GM said that it will not renew franchise agreements with up to 1200 dealers who have not performed adequately, have failed to meet service agreement obligations or do not have sufficient liquidity. The automaker will buy back inventory and parts, but will not compensate those dealers for the loss of the franchise."There was no money for anything other than what the franchise agreement calls for - meaning we can send back new cars, parts, special tools and some signage," said an unidentified dealer who listened to a special broadcast from GM sales head Mark LaNeve describing the closures.GM is seeking to reduce its total dealership count to 3,605 locations by the end of 2010. According to automotive news, GM had 6,273 dealerships (excluding Saab) in the U.S. on January 1, 2009. In addition to the 1200 poor-performing dealers, GM expects to shed 500 dealerships from normal attrition, 500 dealerships that sell Hummer, Saab and Saturn vehicles, 35 standalone Pontiac dealerships and 500 dealerships in saturated metro markets."I look at that last group as more than likely we will get involved with the dealers who are going forward with GM and work with them as buy-sells and consolidations," LaNeve said.Source: Automotive News (requires subscription)

[808 Vibes]

Quote, originally posted by kostby »Cadillac, Chevy, Buick, GMCOn suicide watchLOL

[tnpartsguy]

I only wish this was funny. Consider this, you have a GM dealership; your dad founding it in 1927. You took it over after he grew ill, then passed away. Now your sons are about to take over the helm..... your entire families investment and livfe work is at stake here.It's basically like if Kroger's just started closing stores at random and didn't pay any of it's vendors. If you think the economy is bleak NOW, wait until GM screws 2600 more dealerships, their owners, the employees and the community.

[jimincalif]

Yeah, there will definitely be a cascading effect. For many dealer owners the bulk of their net worth is the value of their business, they will effectively be wiped out. They may have loans outstanding that will be called, all of the various community things they contribute to will lose out, not to mention the jobs at each store.In a normal business valuation analysis, a business has much higher risk and much lower value if it is highly dependent on one supplier or one large customer. Historically this hasn't been a big problem for dealers when their supplier was GM, biggest car company in the world. Things have certainly changed. I wish them luck.