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More auto cuts: GM will eliminate 1,100 US dealers

(Agencies)
Updated: 2009-05-16 14:05

Toyota, for example, generally has larger and newer showrooms and service departments than GM and Chrysler dealers - making those dealerships more attractive to potential buyers.

The Obama administration's auto task force, which is overseeing the GM and Chrysler restructuring because both have received billions of dollars from the government, was aware GM would cut dealers, LaNeve said. But he stressed the company made the decision on how many and where.

Special coverage:  Global Auto Industry Woes Related readings:  GM dealers expect word on shop cut plan  GM to export China-built cars to US  GM's Henderson not ruling out failure cushion  Experts: GM bankruptcy is almost inevitable GM loses $6 billion in Q1

Chrysler is aiming to close its nearly 800 dealers by June 9, and those outlets may try deep discounts to clear out their remaining inventory. But in the long run, prices for cars and trucks will probably rise for customers as dealerships disappear.

"No longer will people be able to shop between three or four dealers within 15 minutes of each other for the best cutthroat price," said Aaron Bragman, an automotive industry analyst with the consulting firm IHS Global Insight.

As GM and Chrysler lost market share to Japanese and other overseas brands, they ended up with too many dealers. So did Ford Motor Co., which has managed to stay healthier than either of its Detroit siblings.

In the 1980s, GM, Chrysler and Ford accounted for more than 75 percent of US sales, but that dropped to 48 percent last year. GM alone held nearly 51 percent of the market in 1962, but only 22 percent last year.

Bigelow was stunned to get his termination letter. He said he believed the dealership was meeting all of GM's criteria to stay in business. He said sales had dropped in the recession - but he didn't know of many dealers who were doing better.

Many of the dealership's 45 employees have been there for 30 years or more. He said they pledged to stay and fight the closing "until there's no more fight left."

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