Cuts may surpass dealers' fears

5/14/2009

As a national auto dealers group pushed Congress for help yesterday, speculation worsened on how many dealership cuts would be made by the financially struggling General Motors Corp. and the bankrupt Chrysler LLC.

The National Automobile Dealers Association lobbied Congress to try to slow plans by GM and Chrysler to cut their ranks.

While the latest planned cuts have yet to be announced, GM is considering dropping up to 2,000 dealers - a third of its U.S. dealership network - and Chrysler up to 1,000 of its 3,200 dealers, with notification possibly coming as early as today, people briefed on the plans told various news services.

That's worse than the 1,000 to 1,200 dealer cuts at GM and 800 at Chrysler leaked out early this week. The details of the plans were still being worked on, the companies said, without disclosing any figures.

The companies plan the cuts to help reduce costs. GM faces a U.S. government-imposed deadline of June 1 to restructure or file for bankruptcy. Chrysler filed for bankruptcy April 30. Each has received billions of dollars in federal aid.

The involuntary terminations also are widely expected to prompt a legal challenge from dealers who are independent retail networks protected by state franchise laws.