One in Six GM Dealers Closing by 2010

By Ross Edwards
Friday, May 15 2009 12:14

More than one sixth of GM’s 6,000 dealerships are finding out today that they will close by the end of 2010. GM says that it will not renew the franchise agreements it has with 1,100 dealerships when they expire in October 2010.

Many of the closing dealerships will be ones that focused on Hummer, Saab, Saturn and Pontiac. Those brands will all be either sold or closed by the end of 2010. Hummer, Saab and Saturn will all be sold within the coming months, so dealers selling those cars will most likely strike new franchise agreements with the new companies. Pontiac will no longer make vehicles after the 2010 model year.

More than 300 GM dealerships have already closed this year due to slumping sales and the difficulty of getting a new car loan.

GM is hoping that cutting down on dealerships will help the company meet the government’s restructuring goals. If GM can’t convince the government that it is economically viable on June 1, the automaker will be forced into Chapter 11 bankruptcy.

Yesterday, Auto Loan Daily reported that Chrysler is forcing 789 of its dealerships to close on June 9. Nearly a quarter of Chrysler’s dealer network will close, an indication if any was needed, that the company is in much worse shape than GM.

GM told the Obama administration that it plans to pare the number of dealerships down to 3,600 by next year, according to CNN Money. That means that an additional 1,300 GM dealerships will close this year.

Gerard Broschart, general manager of ABC Chrysler-Jeep in Valley-Steam, N.Y., told CNN today that his dealership received a phone call from Chase Manhattan Bank stating that it will no longer be accepting consumer car loan applications from ABC Chrysler-Jeep's customers. ABC Chrysler-Jeep is one of the 789 dealerships that Chrysler will be closing next month.

Confused or unsure about some of the car loan terms used in the article? Click here for our Auto Loan Glossary.