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GM to Notify Dealers on Chopping Block

April 30, 2009

DETROIT — General Motors officials have informed dealers that the automaker has begun the process of evaluating more than 1,000 underperforming dealerships to determine which franchise agreements it will decline to renew. Dealers slated for closure will be notified beginning the week of May 11.

National Automobile Dealers Association chairman and Iowa dealer John McEleney said he was surprised by the decision and hopes any eliminated dealers will be "properly compensated."

"GM's decision to radically cut its dealer network over the next 18 months comes as a surprise," McEleney said. "We understand the realities of current market conditions. But nevertheless, we feel a strong sense of disappointment that GM has, for whatever reason, decided to accelerate dealer consolidation in such a drastic way. It is imperative that GM treat all of the dealers fairly and equitably and that they be properly compensated. After all, it's not out of any fault of their own that these dealers are being forced to close their businesses."

Earlier this week, the company announced the demise of the Pontiac brand and said it planned to reduce its number of stores to 3,605 by next year — several thousand fewer than the 6,246 GM franchises that were open for business at the end of 2008. The automaker will also continue to entertain bids for its Saturn, Hummer and Saab divisions.

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