Wary GM Dealers To Discuss Obama Auto Plan Later Monday
30 März 2009 - 5:30PM
Dow Jones News
National dealers for General Motors Corp.(GM) plan a conference
call later Monday amid disappointment and wariness at the tough
conditions laid down by the U.S. government's auto task force.
The White House has intensified pressure on GM and Chrysler LLC
to rationalize their distribution networks. GM already planned to
cut a third of its outlets by 2014, while Chrysler aims to cut as
many as possible.
"We know tough decisions have to be made," said Duane Paddock, a
dealer for GM's Chevrolet brand based in western New York. "But I'm
disappointed that the government didn't feel what was outlined in
the plan was enough."
GM planned to eliminate more than 2,000 of its 6,200 dealers by
2014.
Around 1,000 dealers selling cars from the three major Detroit
auto makers closed in 2008, including 401 GM outlets and 287
Chrysler shops, according to the National Automobile Dealers
Association, which declined comment on the task force plan Monday
ahead of remarks from President Barack Obama.
"[GM] is currently burdened with underperforming brands,
nameplates and an excess of dealers," said the auto task force in
its initial assessment released early Monday. "The [company's] plan
does not act aggressively enough to curb these problems."
The administration has signaled that expedited bankruptcy
remains an option, which would make it harder to cut dealer
networks.
State franchise laws make it costly for auto makers to cancel
products or eliminate brands because they require the companies to
keep products flowing to their dealers.
GM would be ill-served by a standoff with dealers, even with
protection in bankruptcy court. The auto maker relies on its
dealers to order enough vehicles to maintain revenue.
In recent months, the company has pleaded with dealers to
continue ordering cars and trucks despite the downturn in sales,
and many have complied despite being saddled with excess
inventory.
"The dealers are the only source of revenue for GM," said
Paddock, the GM salesman. "We don't cost General Motors money. We
are the only revenue stream."
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com