As part of its Hail Mary play to avoid bankruptcy (or its first post-Chapter 11 recovery move, you decide) GM has announced it will close over 1,000 underperforming dealerships. The bloated dealer network is plagued by low volume independent dealers housing several brands under one roof. In addition to forced closings, hundreds of dealerships are expected to either consolidate or exit the market voluntarily.
As of the end of 2008, GM had over 6,000 dealerships nationwide and another 1,100 in Canada and Mexico. The target figure is now under 5,000. For comparison, Toyota, Lexus and Scion dealerships number just over 1,700 within North America. Ford dealers total 4,600.
When General Motors closed Oldsmobile five years ago, the total cost in dealer buyouts and transfer and consolidation fees exceeded $1 billion. Lawsuits raged as the decision came just weeks after GM reiterated support for the struggling brand. Chapter 11 protection would certainly soften the blow this time around, but will they win the PR battle that comes with the big B?