General Motors and Chrysler will Drop to 2,300 Dealers
General Motors Corp. announced it will drop to 1600 dealers in the context in which it tries to cut the massive operational costs, before the deadline given by the Obama administration to restructure, writes Reuters.
Chrysler had a similar announcement Friday, and put together, the decisions will result in the elimination of 2,300 auto dealers. These unprecedented measures will result in disposal of about 100,000 people and shows the magnitude of the crisis that included American economy.
"It will be a disaster. These dealers are very important for local communities. There will be many side effects," said a consultant in the automotive sector.
GM has announced he wants to give up 1,100 auto dealers that are not profitable, by refusing to renew franchise. Authorizations expire in October 2010.
Auto group has spent more than one billion dollars for the closing of Oldsmobile Division and closed 2,800 auto dealers in the past 10 years. GM does not offer compensation these dealers, but will help to close their businesses.
U.S. auto sales are at the lowest level since the 80s and no indication of a return. GM shares were down six cents Friday at $ 1.09 / title.
GM survives through an emergency aid of 15.4 billion dollars. Total losses recorded by the company since 2004, profitable last year, amounted to 82 billion dollars.
U.S. President Barack Obama has set the deadline of June 1 to restructuring, giving the group 60 days to reorganize without coming into bankruptcy. It rejected the initial plan of the company, made available to 47,000 people this year to reduce debt by 28.5 billion U.S. dollars, saying that it is not enough for the group was healthy again.
Under the restructuring plan published on April 27, GM has decided to delete Pontiac brand, to close two factories and eliminate 7,000 other jobs.
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