Now it's General Motors dealers' turn to get bad news

Just a day after 789 U.S. Chrysler dealers were notified they would be dropped by the struggling automaker, including several Colorado stores, about 1,100 General Motors Corp. dealers are getting the same bad news as early as Friday.

GM's car lines include Chevrolet, Pontiac, Buick, GMC, Cadillac, Saab, Saturn and Hummer. It has some 6,000 dealerships nationwide.

Click here for video as the Denver Business Journal reports on the car-dealer story on CBS4 News.

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The affected GM dealers were expected to be notified by letter or phone call starting Friday that their franchise agreements won't be renewed when they expire in 2010.

Reportedly, the letters will outline the dealership???s alleged deficiencies and detail how it failed to meet the requirements of GM???s sales and service agreements.

About 92 of Colorado's 264 auto dealerships sell one or more GM lines, said Tim Jackson, president of the Colorado Automobile Dealers Association. He said some of the Colorado dealerships were already up for sale before GM began sending out its notices.

In the case of Chrysler LLC, which is under Chapter 11 protection,the list of dealers it plans to dropwas made public when it was filed Thursday in U.S. Bankruptcy Court.

But GM, which has not yet filed under Chapter 11, says it has no plans to publish its dropped-dealer list, so it may not be immediately clear which dealers are affected.

"Unlike the way Chrysler handled it Thursday, this is a private matter between General Motors and its individual dealers," said Duane Paddock, a Buffalo, N.Y., Chevrolet dealer who is co-chair of GM???s National Dealer Council.

"The way Chrysler did it was inhumane, in my opinion," Paddock said. "Basically what Chrysler did was not very respectful of partnerships that they had had anywhere from six months to 40 years. GM is handling it empathetically, honestly and in private. It is up to the dealer to announce it if he wants to."

GM says it eventually plans to drop 2,600 or more dealerships -- 40 percent of its total.

Besides the 1,100 underperformers that GM will cut, another 500 dealerships will depart when GM sells or shuts down the Hummer, Saab and Saturn brands. General Motors also has 35 stand-alone Pontiac dealerships that will go away when it phases out Pontiac by year-end 2010.

GM expects to lose about 500 more dealerships through natural attrition this year. The company has said that through April 275 dealerships will have closed as a combination of voluntarily termination and consolidations.

Five hundred to 600 other dealerships will be closed through consolidations and buy-sell negotiations.

Like Chrysler, GM says it's suffering from an overcrowded dealer network that underperforms in terms of per-store sales in relation to Toyota and other Japanese automakers.

GM's CEO Fritz Henderson, in a conference call with reporters this week, said the process of shutting dealerships will continue for several months he but gave few details.

???We will try to work with them to affect an orderly wind down of their inventory,??? he said, saying it is working out details of reimbursing dealers for warranties.

Henderson reiterated the company???s intention to sell its Saturn brand if a deal can be worked out. A number of parties have emerged, he said. The company also is negotiating with two potential buyers for the Hummer brand, he said, and still plans to wind down the Pontiac nameplate. GM's Saab brand also reportedly is destined for sale or shutdown.

About a possible GM bankruptcy, Henderson repeated, as he said several weeks ago, that a Chapter 11 filing is probable given the task and time frame under which it needs to show it can become viable.

???It is more probable today, but there is still the opportunity and challenge of getting it done outside bankruptcy,??? he said.