As GM’s management thrashes to meet the June 1 restructuring deadline imposed by the U.S. government, word was leaked on Thursday that the company will be terminating the franchise agreements starting in the near future.
Several of the reports we read stated that half of those dealers would be lost when GM decides to sell its Saturn and Hummer brands and the remaining half would be underperforming locations as identified by the company.
That’s a lot of mechanics, salespeople, administrative staff, and others who will be out looking for work. The major problem is that this is an unavoidable consequence of a shrinking business. There’s simply not enough sales volume to support all of these dealers.
Apparently this is not a cheap solution for GM either, as the termination of Oldsmobile and the nearly 3,000 dealers that sold them cost the company about one billion dollars. Simple math says that this is slightly more than half of that, so the broke GM is going to pull 500 million out of a magic hat to complete this process. Oh wait, that’ll be our $500 million. No problem, guys.
This calls for boilermakers. Bottoms up.
Here’s a link to a Yahoo news story on this situation.
