BBC Business News is reporting that General Motors has announced plans to close up to 1,100 of its dealerships in the US as it desperately tries to cut costs and stave off bankruptcy.
In addition, it will sever ties with 450 Saturn, Hummer and Saab dealers.
Closures announced today represent one quarter of the dealership network. GM plans to cut the total number of dealers by 42% by the end of 2010.
On Thursday, rival Chrysler said it would be closing 789 US dealers as part of a massive restructuring programme.
GM currently has 6,246 dealers in the US and plans to cut the number to 3,605.
GM says the move will reduce costs, but others say that dealerships, as franchises, are not a cost to the company but actually generate much needed revenue.
Some fear that the closures will flood the market with cut-price cars, pushing prices down.
“A concern of all dealers would be if the market value of vehicles were to decline because terminated dealers would desperate to sell,” said Jim Eagan at consultancy Plante & Moran in Michigan. Full story…