GM dealers wait for word

DETROIT -- A day after Chrysler LLC told a quarter of its dealers that it won't renew their contracts, owners of General Motors Corp. dealerships are awaiting word on whether they will be next.

GM said it will notify 1,100 U.S. dealers today that their franchise agreements will not be renewed. Dealers expect to hear either by telephone or FedEx letters that will begin arriving this morning.

The cuts will come just a day after crosstown rival Chrysler announced it was dropping 789 of its roughly 3,200 dealerships by around June 9.

The Stan McNabb Chrysler dealership in Tullahoma will remain open.

Sales manager John Lewis of Pirtle & Howerton Automotive, a GM dealer in Shelbyville, said he had received no official word this morning but expects that Pirtle & Howerton will retain its GM dealership.

"We haven't heard anything," said Lewis, "so I guess we're all right." He said he has heard unofficially that there will be only a few GM closures in Tennessee and that most of the GM dealerships shutting down will be in the North.

Both GM and Chrysler have too many dealerships for too few sales and are slashing costs as they race to restructure.

The GM dealer cuts are likely to have a much greater impact than Chrysler's. While many Chrysler dealers also sell other brands and will stay open after losing their franchises, a large number of GM dealers sell only GM vehicles. So if their franchises are revoked, they run a greater risk of closing for good.

The Pirtle and Howerton GM dealership on Main Street in Shelbyville sells only GM vehicles; however, the business has a Ford dealership on a lot adjacent to the GM dealership.

In both cases nationally, the cuts will cost thousands of jobs, create holes in local tax bases, eliminate community pillars and create economic ripple effects across the country.

Chrysler is operating under bankruptcy protection, so it is likely to have an easier time tearing up its franchise agreements with its dealers than GM. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York for the judge to determine whether to approve Chrysler's motion to fire its dealers.

Chrysler executives said Thursday the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half of the dealerships being eliminated sell fewer than 100 vehicles per year, they said, and account for 14 percent of U.S. sales.

The National Automobile Dealers Association says about 40,000 people work at the affected Chrysler dealerships. Many will keep their jobs, but their dealerships will be left to sell only the other brands in their showrooms or used cars.