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1,100 Dealerships To Lose GM Franchise

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May 15, 2009 7:13 pm US/Eastern

1,100 Dealerships To Lose GM Franchise

Reporting
Jon Delano
PITTSBURGH (KDKA) ― Using overnight FedEx delivery, some 1,100 General Motors dealers got the word today that they would be losing their GM franchise.

But unlike Chrysler, the names of the dealers who got the bad news were not made public.

And the unlucky dealers will not need to close anytime soon.

Still, most Pittsburgh area GM dealers were on pins and needles.

Tony Castriota has been in the car business for over 58 years, and it looks like he'll be around awhile longer.

"I have not received a letter."

Castriota of Castriota Chevrolet did not get one of those General Motors closing letters.

"The dealers that have performed, have done their potential, have covered their market share, are going to come out of this thing okay."

Up the road on West Liberty Avenue, Bill Gray was feeling good, too.

"I haven't heard anybody say they've gotten the letter. I can't imagine that anybody is going to tell you that they've gotten a letter," Gray of Gray Automotive told KDKA money editor Jon Delano.

Delano: "Why not?"

Gray: "Well, I think that would instantly put them out of business."

Gray has a point -- GM is handling its dealership closings very differently than Chrysler.

Unlike the Chrysler announcement where dealerships will be closed as early as this June, General Motors is going to phase out its 1,100 dealerships, essentially not renewing their franchises beginning at the end of September in 2010.

That means, for the moment at least, at GM it's business as usual.

And time is money for the affected dealers.

"That will give them time to dispose of vehicles, possibly land another franchise if possible, or dispose of the property," says Castriota. "It's not as though they're closing the door."

And Pittsburgh may not feel the closings as much as others.

"We're always the softest landing across the country," notes Gray. "It seems like the western states, California, always gets hit hard with trends and things that happen in the industry."

As for those left standing, says Gray, "Hopefully, that means that we can derive more business from people who are loyal to General Motors. General Motors still has great product."

It's classic survival of the fittest.

Now both Tony Castriota and Bill Gray say that the dealers who survive will need more technicians and sales people -- so the job impact may not be as bad as feared.

But, of course, it all depends on how quickly the new General Motors can retool with affordable, good mileage, high quality cars that the public will buy.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

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