Nearly 2,000 GM, Chrysler dealerships to shut down

By Marcus Amick | Last updated: Jun 15, 2009 - 5:24:52 PM

DETROIT (NNPA) - The impact on minority-owned franchises is still being sorted out. The actual damage is still being assessed.

Graphic: MGN Online

But in what will likely go down as one of the worst weeks ever for American car dealers, 1,100 General Motors franchises have been notified that their operations could be shut down by next year, a move some have feared will impact minority-owned dealerships most.

The notices, issued on the heels of Chrysler's announcement that it will close 789 dealerships by June 9, came as both automakers worked aggressively to streamline costs and meet stipulations made by the federal government's Auto Task Force after receiving additional bailout money to stay afloat.

GM, which faces a fast approaching June 1 deadline to present its plans for viability to the federal government to avoid bankruptcy, said the move is part of “its longterm planning” strategy to eliminate underperforming and small sales volume dealers in the U.S.

In most cases, existing franchise agreements run through October 2010, noted GM.

The automaker will also be updating about 470 Saturn, Hummer and Saab dealers on the status of those brands as part of the company's retail plans going forward.

Of the 789 Chrysler dealers who were notified that their contracts will not be renewed, 38 are minority owned. Fourteen Chrysler dealerships in metro Detroit received notifications but none were minority owned.

At the end of April, there were 154 minority dealers in Chrysler's 3,181 total U.S. dealer body network, which includes two in the metro Detroit area.

“It's unfortunate that we had to lose any dealerships,” said Marcus A. Foreman, Chrysler LLC, Network Diversity and Dealer Development manager. “My job is to ensure that when we keep the essence of what we are trying to, that we didn't do any that was unfair or inequitable for the minority dealers or any other dealers.

“We had a set of metrics and the number happened to be right at the 25 percent for minorities and the total dealer body,” said Mr. Foreman. “Anytime you have something of this magnitude happen, you have to be really sensitive. So we were very careful.”

The number of Chrysler's overall dealerships that received termination notices was 25 percent as well. Rev. Jesse Jackson said that it is important to remember the issue is bigger than just minority dealerships.

“You have to think about the whole house and not just your room in the house,” he said. “You've got some fifth generation (White) dealers that are getting cut right now.

“You lose dealerships, suppliers, workers and a tax base which affects schools, teachers. Right now, we are helping banks; we are eliminatingfranchises.”

According to published reports, the closure of the 14 metro Detroit Chrysler dealers will eliminate 768 jobs in the area, based on an estimate by the National Association of Automobile Dealers that there are 48 employees working at an average Michigan car dealership.

A letter to President Obama sent jointly from the American International Automobile Dealers, National Automobile Dealers Association and the National Association of Minority Automobile Dealers highlights how many jobs were lost last year due to dealership closings.

The letter, dated March 2, 2009, states that “within the past 12 to 14 months, approximately 1,000 dealerships have closed, putting more than 50,000 Americans out of work. On top of this, the crisis has prompted thousands of additional layoffs at the dealerships that are still operating.”

It's been reported that nationally, all the dealership closings, including GM and Chrysler, could cost 187,000 jobs—more than the number of people who work for the two automakers in the U.S.

GM officials said that additional dealership cuts will be made as the carmaker pushes to reduce its dealer network to around 3,600 by the end of 2010, along with further attrition and additional possible dealer network actions.

Rainbow/PUSH held a march in Lansing on June 1 calling for the government to develop a more comprehensive package to reinvest in the American manufacturing industry to save jobs.

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