GM Accelerates Restructuring. Glimmers of Hope for Chrysler.
In the last weeks, GM has increased the intensity of its internal dialogue and negotiations with the Obama Administration to keep from being killed off. A summary of where GM is as of right now:
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- Plans to shut half of its 6,200 U.S. dealerships by 2014.
- Will close 13 plants by 2010.
- Will continue to cut jobs, saying it will have 40,000 hourly workers in 2010, down from 61,000 in 2008.
- Will phase out Pontiac by next year. No Pontiacs will be rebadged as Chevys.
- Is accelerating plans to spin off, sell or close Hummer, Saturn and Saab. GM has already had bids for Hummer and will discontinue building vehicles for Saturn after the 2009 model year.
- Will continue to invest in four core U.S. brands: Chevrolet, Cadillac, Buick and GMC.
- Will offer stock to debt holders to reduce its overwhelming debt load.
- Will file for bankruptcy unless a sufficient number of debt holders agree to take stock before a government-imposed deadline of June 1.
In other news, within the last few days it seems that the haplessly doomed Chrysler may be on the verge of deal with Fiat and may have gained much needed concessions from its union. Details of the plans were not released, but the New York Times is attributing the validity of the claims to an anonymous union leaders who say the the deals are not finalized yet.
Sources: NYT, Automotive News
Image Credit: Rance Costa’s Flickr Photostream. Used under a Creative Commons License.
I am confused. GM dealerships are NOT owned by GM so why this fascination with closing them down? We’ve already seen a LOT of consolidation in my area and left with some pretty crummy dealers that don’t give two hoots about actually providing some level of service.
Can someone explain?
Since it is illegal (in most states) for GM to simply stop providing Pontiac cars to Pontiac dealers, GM has to “close down” said dealers by buying them out.
As CNN put it, “Just shrinking this company to get it more focused.” (as quoted at http://www.newsy.com/videos/pontiac_bids_farewell/)
So although I don’t think the debt/equity exchange will be especially appealing, it’s a good idea to slim down the company to focus on some of the better avenues of income, like Buick.
Here is a snippet from the USA Today that says what they are doing…still don’t understand why GM is targeting dealerships for closing since THEY DO NOT OWN THEM. This is akin to Coke shutting down grocery stores when their crummy “new” Coke didn’t sale. Makes no sense…
“General Motors (GM) told its dealers Tuesday that it will force 1,000 to 1,200 underperforming locations to close their doors as the automaker tries to thin dealer ranks to make the remaining outlets more profitable.”