GM Pushes to Meet June 1st Deadline for Financial Cuts
With the recent state of the economy, it’s only natural that the auto industry is also feeling the economic squeeze. However, no one accurately predicted just how much of a financial hit General Motors would take. At the end of 2008, General Motors owned over 6,000 dealerships. With the recent viability plan that GM has just given to the government, this will no longer be the case. General Motors has pledge to close approximately 25% of their 6,000 dealerships over the next five year period.
However, this apparently wasn’t enough. As a result, General Motors has already closed 200 dealership locations this year alone. With a June 1st deadline to completely restructure their business, General Motors has been speeding up the approximate timetable for closing over 1,700 dealerships. Among the car models that are being threatened by this plan, is the famous “Hummer” model. According to a GM spokesperson, however, there are many potentially interested investors that may help finance the continued production of the Hummer model. Even so, a spin-off of the Hummer brand to investors may not actually happen, which would halt production of this notorious SUV model.
US officials have been providing constant pressure on General Motors, which many people are now speculating will result in a bankruptcy filing by GM. It’s estimated that only 4,100 General Motors dealerships will remain after GM’s five-year dealership closing plan has finished. However, government officials are now pushing for an even more extreme financial move by GM, which needs to be concluded by June 1st, 2009. Already, GM is speculating that the closing of the Saturn and Hummer brands will provide a good portion of the financial cuts that they need to meet the standards of US officials. For additional financial planning, GM is also preparing to do away with possible financial payouts when closing divisions, which cost GM over $1 billion dollars when the Oldsmobile division was closed. We talked briefly with a few New Jersey Hyundai dealerships, and they seem optomistic about this plan increasing their sales. Time will tell.
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