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Auto Dealership Closings Reverberate Across Economy

General Motors and Chrysler announced the closings of hundreds of dealerships in an effort to bring the companies back from the brink of bankruptcy. Analysts examine the impact of the moves.

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    General Motors today began a process to eliminate about 1,100 of its 6,200 U.S. dealerships. Those cuts are part of a larger restructuring plan aimed at preventing bankruptcy.

    Jeffrey Brown has our lead story report.


    It was an anxious day for G.M. dealers around the country as they waited for word about whether they would survive. When the call came to this dealership in Alexandria, Virginia, Jim Warren felt…

    JIM WARREN, sales manager, Alexandria Chevy: Well, relief, employed, you know, for another day at least. So, obviously, it was a relief to all of us, to just know where you're going to be, to have that sense of continuance.


    His dealership having been spared, Warren will continue as sales manager at Alexandria Chevy, which employs some 50 workers.


    A dealership, it's a building with cars, but it's also got a whole bunch of people in it. It's people who cannot now go across the street and just get a new job, because, with the dealer numbers being shed, where exactly are they going to go?


    Many others are now asking that same question. The 1,100 G.M. dealers who were notified today that their contracts would not be picked up were part of the automaker's plan to cut some 40 percent of its total 6,200 dealers by 2010.

    The rest of the cuts will come as G.M. phases out or sells its Saturn, Hummer and Saab brands and as dealers voluntarily close or are consolidated.

    On a telephone conference call this afternoon, G.M.'s vice president of sales, Mark LaNeve, said the decision was not made lightly.

    MARK LANEVE, General Motors vice president of sales: It's not something that we didn't do without a lot of deliberation, a lot of thought, a lot of poring over the lists, re-poring, checking the data, you know, making sure that — that we actually — you know, that we absolutely had it as right as we possibly could.

    And, you know, it's just a move that, you know, perhaps people could argue should have been taken years ago, but, you know, certainly this leadership team has no choice but to take now and I think will be good for — as painful for the dealers as it is, will be good for the remaining dealers and for the business long term.


    Today's announcement came just weeks before G.M. faces a deadline to present a restructuring plan to the government or a bankruptcy filing.

    It also came just a day after Chrysler, which has already filed for bankruptcy, announced it was dropping a quarter of its dealerships.

  • STANLEY BALZEKAS, Balzekas Motor Sales, Chicago:

    They do not want us to be a Chrysler dealer anymore. It's a little hard for me. I hate to break up at this point, but time has come.


    Chrysler's vice chairman, Jim Press, addressed the closings on a conference call yesterday.

    JIM PRESS, Chrysler vice chairman: It's not a day that anybody can be prepared for, but we're going forward with the appropriate plans. I'd like to start by making it clear that, also today, there are no winners, there's no losers.


    Of course, Chrysler dealers who were cut loose felt otherwise. Rob and Rick Engel are brothers who own two Chrysler dealerships in Wyckoff, New Jersey, a business started by their father more than 40 years ago.

  • RICK ENGEL, Wyckoff Chrysler:

    They've already told us that they're not going to be buying back our parts and they're not going to be buying back our new car inventory.

  • ROB ENGEL, Wyckoff Chrysler:

    They're telling us — yes, that's the really, for us, frightening news is that, you know, we are burdened with these cars and with these parts. It's really, as far as I'm concerned, not a moral way to treat dealers that have been around for so long and have done a good job.


    All told, the cuts by G.M. and Chrysler could threaten more than 60,000 dealership jobs.

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