General Motors Corp. is sending termination notices today to 1,100 U.S. dealers with about $2.5 billion in unsold vehicles as the automaker starts shrinking its retail network.
The dealers hold about 120,000 GM vehicles of various brands, said the person, who asked not to be identified. The company scheduled a conference call for reporters with Mark LaNeve, GM’s North American sales chief, at noon New York time.
GM is working to pare U.S. dealers by 42 percent, to 3,600, by the end of next year as it faces a probable bankruptcy by a June 1 government-set deadline. With competition reduced among retail outlets, the remaining dealers each may be able to sell more cars at higher prices, boosting profit, the person said.
GM is hoping for an orderly wind-down of the affected dealers over the next year or so, the person said, which means they will close when their inventories are gone.
The next wave of dealer terminations will take place as some dealers decide whether they wish to remain, leaving the automaker to choose who it wants to keep, the person said.
(Source: Bloomberg) (Taken almost entirely from: VosIzNeias)
(MRN- 18)
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