GM Cuts 1,100 Dealerships in U.S

Well, yesterday it was Chrysler, today, the other shoe fell. General Motors cuts 1,100 dealerships.

General Motors announced plans to drop about 1,100 U.S. dealers as it struggles to slash billions of dollars in operating costs and debt ahead of an anticipated bankruptcy filing by the end of the month.

Taken together with a similar announcement by bankrupt Chrysler a day earlier, over 2,300 U.S. auto retailers have been put on notice that they are being eliminated by the two embattled automakers.

The unprecedented closures taken under the oversight of the Obama administration's autos task force put over 100,000 jobs at risk across the United States and show the spreading economic pain from the collapse of the two Detroit-based automakers.

GM confirmed it planned to eliminate about 1,100 dealerships on the grounds that they are less profitable and weakly capitalized by letting their franchise agreements expire between now and the end of 2010.

The automaker expects to drop another 470 dealerships from cutting its Saab, Hummer and Saturn brands, said GM spokesman John McDonald.

After merging remaining dealerships, the plan is for GM to cut about 2,600 showrooms, or 40 percent of its U.S. retail network.

"We are telling them basically that you are not going to fit into the picture long term, but between now and then we will help wind the business down the best way individually with each dealer," GM spokesman John McDonald said.

GM dealers affected by the closure plans received letters by express mail Friday morning informing them that the automaker did not see how it could have a "productive business relationship" after 2010.

Well, congratulations President Obama, you have successfully moved 100,000 people onto the public payroll. Now, instead of fostering a true renegotiation of the union contracts, which would have lowered the production costs of GM and Chrysler cars to competitive levels, President Obama has supported the Unions, which empowered them to stand up to GM and Chrysler which has led to Chrysler's bankruptcy, and the impending GM bankruptcy, and at least 100,000 people (non UAW people, so they really don't count to President Obama) have lost their jobs. And who is going to pay for this? Who is responsible for picking up the tab? US. The taxpayers. As these people loose their jobs they will collect unemployment. They will loose their health case so they will move to government sponsored plans, that we all pay for. The consequential costs of this are enormous. Each one of those dealers also supported local economies, paid taxes, bought food at local diners, paid landscapers, paid for trash pickup, etc. Each dealer that gets put out of business effects each business that it dealt with. Therefore spreading the misery. That is the damages that protecting Unions will deal to the economy.

And this depressing economic news comes after Chevrolet (a GM unit) and Ford posted some impressive numbers against rival Toyota.

For the first time all year, not one but two Detroit brands outsold Toyota. Chevrolet and Ford both posted brand sales that exceeded Toyota’s figures, proving that there are some silver linings, at least in Detroit, in the continuously cloudy new car market in the United States.

Toyota wasn’t the only Japanese automaker to post a bigger-than-expected sales decrease; Nissan posted its biggest decline of the year and Subaru posted its first sales slide this year.

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Hyundai sales were down 14 percent, the least of any high-volume, non-luxury brand so far. April was the best month ever for the Genesis and the Accent and Sonata both saw 26 and 7 percent increases, respectively.

Both Chevrolet and Ford outsold Toyota for the first time in 2009. Toyota’s 112,345 cars and trucks couldn’t match Chevrolet’s 115,265 or Ford’s 116,263.

Chevy’s Traverse crossover sold a reasonable 8,2004 units, its best month this year, while HHR, Tahoe and Express passenger van sales were all up, as well. Overall GM sales were down 33.7 percent to 173,007 units.

Ford’s Fusion, including the 2009 and redesigned 2010, which recently hit dealers, had its best-ever April with 18,321 units sold.

So lets debunk the myth that GM and Ford can't build cars that Americans want. The problem is that GM, Ford and Chrysler cannot produce cars that Americans want at the same price point that Toyota, Honda and Nissan can. The reason why is simple. The American big three are struggling against high health insurance costs, high pension costs and until recently, high job board costs. These are costs that add to the bottom line, that Honda, Toyota and Nissan just don't have. And its was not bad business that straddled them with this debt. It was the fear of union strikes, bad publicity and political pressure that forces the big three to kowtow to union demands. If you want to save the automakers, if you want to save American manufacturing, if you want to save the economy, if you want to save blue collar workers, you have to force the unions to make hard decisions and help the companies survive.