General Motors Corp. 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.
GM told the dealers about the plan in a private video conference.
The company expects to lose 500 Hummer and Saturn dealers when those brands close or are sold, and it expects 400 dealers to close voluntarily. Another 500 would be consolidated into other dealerships, according to a dealer who spoke to the Associated Press on condition of anonymity.
There are 26 GM dealerships in the central San Joaquin Valley.
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Neither Brett Hedrick, who owns Hedrick's Pontiac Buick GMC in Sanger, nor Randy Skate, general manager of Kitahara Pontiac Buick GMC in Fresno, would discuss GM's moves to close dealerships.
John Wright, general manager of Madera's Vintage Pontiac Buick GMC and Cadillac, said it's still early in GM's decision-making process.
"The conversation was that they're going to look at the big cities and rural locations," Wright said. "They're not going to be concentrating on one particular area.
"They're going to take a lot of factors into consideration," Wright said, declining to discuss specifics. "I think we have a lot of stuff going in our favor, but there are a few issues at work against us at the same time."
Wright said he believes Vintage's established location is to its favor. "Anybody who went out and built a new facility in the last few years is probably hurting right now," he said.
Mark Rapin, head of the Fresno-Clovis New Car Dealers Association and vice president of Fresno's Freedom Ford, said he anticipates GM's cuts will be aimed more at metropolitan areas where there are multiple dealerships rather than smaller, outlying towns.
"As far as I've heard, none of the local dealerships are likely to be affected," Rapin said.
The plan announced Tuesday is the first wave from GM, which announced Monday it will reduce dealerships by nearly half by 2010, from 6,246 to 3,605.
GM is living on $15.4 billion in government loans and faces a June 1 government deadline to complete restructuring moves, win concessions from its unions and cut its debt. If it fails to meet the deadline, it will go into Chapter 11 bankruptcy protection.
GM has decided to scrap its Pontiac brand and either sell or close Hummer, Saturn and Saab. It will focus on four core brands: Chevrolet, Cadillac, GMC and Buick.
Dealership reductions aren't limited to GM. "Ford is losing dealerships across the country because of the economy; these dealers just can't afford to keep the doors open," Freedom Ford's Rapin said. "It's not just GM and Chrysler. The entire industry is over capacity versus demand right now. Do we need as much manufacturing capacity or dealerships to support the units being sold?"