GM to close 1,100 dealerships in 2010

Steve Quinn knows two things: how to be a Marine and how to sell Chevys.

"It's really all I've known," he said. "I started selling Chevys when I got out of the service in 1981 and have been doing it ever since."

Quinn, general manager of Videon Chevrolet on West Chester Pike in Newtown Square, Delaware County, received notice yesterday that his dealership is one of 1,100 that General Motors plans to close by October 2010.

Yesterday's announcement amounted to a one-two punch for the American auto industry, as it came just a day after Chrysler announced it was shuttering 800 dealers as part of its bankruptcy restructuring effort.

GM and Chrysler are trying to reorganize and stay afloat through a severe recession that has drastically reduced car and truck sales for U.S. automakers, which had already been losing market share to foreign companies for decades.

GM declined to reveal which dealers would be eliminated, but an informal survey of those in the Philadelphia area revealed that most dealerships were not getting the ax. Managers at several locations said that they hadn't received any notice, others would not comment.

Letters bearing the bad news began arriving by FedEx yesterday morning.

The letters state that dealers had been judged on sales, customer-service scores, location, condition of facilities and other criteria.

The company said in a statement that the targeted dealers represent about 20 percent of GM's total but make only 7 percent of its sales. That statistic suggests that smaller dealers were more likely to get the axe.

The letter that arrived at Quinn's dealership - whose motto was listed on its Web site as "Large enough to serve you . . . Small enough to care" - didn't specify why his shop was targeted, but he believes it may be because he runs an older facility. He said he thought that shouldn't matter.

"Our customer-service satisfaction was through the roof," Quinn said incredulously.

Besides the dealership cuts, the company said it plans to shed about 500 dealerships that market the Saturn, Hummer and Saab brands, which GM plans to phase out or sell. The company already announced that it was discontinuing its Pontiac line, which was once the poster child of the American muscle car.

When the surviving dealers' contracts are up in late 2010, GM will cut more by not offering renewals to about 10 percent of the remaining dealers.

"So then that means those dealerships will have until 2010 to wind down their business, find another franchise or possibly retire early," said Fred Perrine, the owner of Perrine Buick, Pontiac, GMC, Hummer, and Saab in Cranbury, N.J., which was spared in yesterday's cuts.

Although GM doesn't own the dealerships, the company says its network is too big, causing dealers to compete with one another and giving shoppers too much leverage to talk down prices and hurt future sales.

In the long run, disappearing dealerships could mean higher prices for consumers, according to some industry analysts.

The National Automobile Dealers Association expressed its disappointment with the decision and said that as many as 63,000 workers could be out of a job.

For Quinn and his staff, one positive aspect of yesterday's announcement was that unlike Chrysler, which is shuttering its dealerships by the end of June, he and his employees have a while to look for another job.

"It's not like we are locking the doors tomorrow and taking all the cars off the lot, but it's still definitely, as you can imagine, very difficult," Quinn said.

"It's not going to be nice going home tonight," he said. "I don't know what it's like to be out on the job market like this." *

The Associated Press contributed to this report.