Two of America's largest auto manufacturers announced this week they are terminating their contracts with 1,889 dealerships.
On Friday, General Motors announced it would cut 1,1oo dealerships. On Thursday, Chrysler announced 789 cuts. Twenty-seven of those Chrysler dealerships are in Missouri, including Dodge City Motors in Columbia.
GM has promised the Obama administration it will reduce its total number of dealerships from 6,000 to 3,600 next year, meaning an additional 1,300 dealerships will need to be closed. Some of the additional cuts will come from GM's plan to close four brands – Saturn, Hummer, Pontiac and Saab.
The contracts GM announced it will not renew do not expire until October 2010. Many of the dealerships are expected to close their doors immediately, but they have the option of remaining open through September of next year.
Chrysler announced its cuts in bankruptcy court Thursday as part of the company's restructuring. GM has not filed for bankruptcy yet, although Chief Executive Fritz Henderson told CNN Monday that such a filing is "probable."
An average dealership has about 52 employees, according to the National Automobile Dealers of America. Once completed, all of the planned dealership cuts at Chrysler and GM will eliminate 140,000 jobs, NADA estimates.
The dealership cuts are seen as a key step to helping GM and Chrysler compete with foreign car companies like Toyota and Honda, which have far fewer U.S. dealerships.
Is eliminating dealerships a sign of hope for the Big Three automakers?