General Motors Gives Up on Dealers

The Regional Dealer and The Silverado Sheriff

American giant General Motors tries to escape the crisis' grip by adopting tough methods at all levels of its structure. Following this week's announcements of job cuts in the U.S. and shorter workweeks in Russia, GM plans to get rid of 400 dealers per year until 2012.

GM has 6,375 partner dealers in the United States. Their number has to be reduced to about 4,700. Criteria to be used in establishing which dealers will be cut is yet to be decided. Most likely, decisions will take into account the dealerships' location, size, volume of sales and age of the store.

So far, it is unclear what is the method to be used for these dealer cuts. "They basically said, 'We're looking for strong dealers, and if you're not a strong dealer, you better evaluate your options,' " Larry Dimmit, a car dealership owner, was quoted as saying by Autonews.

Dealership owners, however, hope the method chosen will benefit both sides, as some of them talk about buyouts. Nevertheless, the newly announced decision has created a tense relationship between dealers and GM.

"I have never heard so much outright hostility and negativity between GM and its dealers,” Duane Huff, an Ohio dealership owner said to Autonews. Some of the them are accusing GM of working together with GMAC in setting high capital requirements, while being fully aware that some of the dealerships can not comply.

GM officials say the 400 dealers per year cuts “are not set in stone”. The full range of cuts and the criteria will be presented as part of the restructuring report GM is scheduled to submit to Congress in February .