General Motors dealerships around the country were finally able to breathe a sigh of relief, while others saw their worst fears come true, as the automaker sent out letters Friday to end 1,100 dealer contracts next year.
The letters went to about 20 percent of the dealers that sell the troubled automaker's vehicles and stated that GM would no longer do business with them when their contracts expire in October 2010. It was unclear how many of the 95 GM dealerships in Maryland would be forced out of business because the company did not offer specifics, including which dealers it targeted.
Reporters from The Baltimore Sun called more than 50 dealerships, and while many of the owners didn't return calls, more than a dozen said they hadn't received letters or were told they wouldn't have to close. Others were still awaiting word.
"This has been a difficult process, and we took it very seriously," Mark LaNeve, North American vice president of vehicle sales, service and marketing for GM, said during an afternoon conference call. "It's not something we didn't do with a lot of deliberation, a lot of thought and a lot of poring over the list."
The announcement by GM came just a day after Chrysler LLC notified 789 dealers, or 25 percent of all its dealers, that it was shutting them down. Both companies are trying to turn themselves around financially, even as consumers have cut back drastically on car buying. Chrysler is reorganizing under bankruptcy while GM is trying to avoid also ending up in court. GM wants to reduce the number of dealerships from 5,969 to 3,600 by next year.
The closings by both automakers could have a devastating effect on cities across the country, putting as many as 100,000 people out of work, according to one industry group. It could also force many dealers, who have invested millions into their businesses, into financial straits. Some have said they might have to declare bankruptcy.
The Maryland Automobile Dealers Association said Friday that it had received calls from about six dealers who said they got letters from GM. A man at Damascus Motor Co. Inc. said the dealership has gotten notice it had to close, but he declined to give his name or comment.
Russell Barrett, president and general manager of Barrett Chevrolet in Berlin, didn't get a letter and said his district manager told him the dealership was safe. Barrett, whose grandfather started the business in 1951, said he was nervous awaiting word even though the dealership has remained profitable.
