General Motors Corp. (GM) will send letters to at least 1,000
auto dealers by Friday warning that their businesses are considered
underperforming.
The auto maker is trying to cull 2,600 dealers by 2010 as part
of a downsizing ordered by the Obama administration as the company
struggles to avoid a bankruptcy filing.
The company recently completed an evaluation of its dealer
network that determined which dealerships should go and which
should stay, GM spokeswoman Susan Garontakos said Wednesday. The
development was first reported by Automotive News.
The reductions are part of sweeping moves by GM as it tries to
shrink itself in line with sharply lower sales levels in the U.S.
GM's dealer network is sized for a time when the auto maker
commanded a much greater share of the U.S. market and faced fewer
competitors. The company has said it needs smaller, healthier
dealers to be competitive. But dealers, protected by state
franchise laws, have fought GM's efforts to shrink its network.
Chrysler LLC, in bankruptcy protection, is working on similar
reductions.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com