Why Were Certain Chrysler and GM Dealers Given the Pink Slip?

The automotive retail landscape has been dramatically reshaped as both Chrysler and GM together have terminated almost 2,000 dealers as part of their on-going restructuring efforts. They were able to use the bankruptcy process to circumvent strong state franchise laws to shed dealers. At times there appeared to be no rhyme or reason to the selection process, leaving both dealers and consumers perplexed. Last week, as new details and documents surfaced explaining why certain GM dealership agreements would not be renewed in 2010, Automotive Traveler's Jim Brennan updated his previously published story with additional updates on the GM closures.

In the next few days, Automotive Traveler will start a series featuring the story behind some of these closings and their impact on individual communities. While we will attempt to simply report on each closing, we think that readers will find it difficult not to take sides, especially if they live in a community where these closings hit home. And if you read more, you'll see how a certain morning talk show host has taken to the airwaves to plead the case for saving her parent's dealership from termination.
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ChevyFan100 - 6/18/2009 11:57:31 AM

+1 Boost

GM picked dealers that were rated poor and had old facilities.
GM also closed dealers that had poor sales. The dealer in the picture above must of had either a poor facility or bad customer service.

Godgore - 6/18/2009 8:28:20 PM

+1 Boost

There were too many GM/Chrysler dealerships and not enough customers to sell them to. Really sucks for those who need warranty work now.

bfghemicuda - 6/18/2009 9:38:11 PM

+2 Boost

These cuts were in the works for over a year or two. Warranty work can be performed at other dealers. A good portion of Chrysler dealers that were cut were geared to sell more used cars than new.

ExGC - 6/19/2009 7:40:44 AM

+1 Boost

GM picked dealers for a variety of reasons. A friend of mine whose dealership got the notice - not one of the terminated brands - was in the middle of the pack for sales. He was told he was terminated because he also owns dealerships for competing brands and they were terminating those who weren't "loyal" and "dedicated to GM" unless they were extremely high performers.

LauderdaleDriver - 6/19/2009 9:47:22 AM

+1 Boost

Excess dealers is one of the reasons that bankruptcy was inevitable. It costs money to maintain them, and with lower market share, they need fewer. Also, the remaining dealers were canibalising sales from each other, cutting prices. Many of these dealers were in areas that were prime in 1955, and dead in the water today.

The state franchise laws, enacted by politically powerful dealers, were probably one of the biggest reasons that GM had to go into bankruptcy. It was costing them $500-$1000 per car to maintain an obsolete dealer network. You can be certain that Ford will be continuing to remove weak dealers, and might eventually follow the others into bankruptcy, to do the same.