GM to close 1,100 dealerships

Some 1,100 U.S. dealers got letters Friday telling them that General Motors Corp. won???t renew their franchise agreements when they expire in 2010.

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

The dealer notifications are part of GM???s plan to cut its dealer network by 2,600 locations ??? 40 percent ??? by the end of 2010.

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Chrysler dealers learned on Thursday in special delivery letters which ones will survive and which ones won???t. The automaker, which is operating under Chapter 11 bankruptcy protection, also released a full list of the 789 dealerships being closed. The list included at least four Milwaukee-area dealerships, including Braeger Chrysler Jeep in Milwaukee.

Unlike Chrysler, GM did not release a list of dealers it plans to close.

???We have said from the beginning that our dealers are not a problem, but an asset for General Motors,??? said Mark LaNeve, GM vice president of sales service and marketing, in a statement to the media. ???However it is imperative that a healthy, viable GM have a healthy, viable dealer body that cannot only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient.???

Besides the 1,100 underperformers that GM will cut, another 500 dealerships will depart when GM sells 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. Up to 600 other dealerships will be closed through consolidations and buy-sell negotiations.

The moves to shrink dealer networks underscores the economic pain caused by the downward spiral of General Motors and Chrysler, now operating under U.S. government oversight.