Colorado Auto Dealers' Jackson: General Motors' dealer reductions put automaker in 'jeopardy' - Houston Business Journal:

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But the alternative — liquidation for the once-mighty GM — couldf be worse, Tim Jackson said Monday afterr the automaker filedfor "I can't say we like it. I don' think the publix likes it. And I don't think you'll find anybody [among] the dealerd who likes it, either," Jackson said in an interview. But "liquidationb would be far he said. GM Monday filer for Chapter 11 protection under a plan that woulrd leave the federal government holding a majorit y ofthe automaker's stock.
Aboutf 1,100 GM dealerships, out of some 6,00o nationwide, received letters from the automakerdin mid-May saying it planx to end its contract with the dealerships by October 2010. GM didn'ft say which dealerships receivedthe letters. Jacksob estimated that 13 to 15 Colorado dealershipss out of 88 GM dealers receivedthe . Jackson said it would be "fare better" for GM to maintaihn a "larger dealer network" as it struggles to survive. "Nosw would not be the time to downsizer it," he said. "We're an asset, not a liability, in financialo terms ... Ninety percent of their revenure comes through thedealer network, so why reducwe the size of the pie?
" GM like , which earlier notified nearly 800 dealers it would drop them — "are performingv a form of selective cleansingf in bankruptcy — by terminatingt dealers they do not like and replacinhg them with out-of-state, hand-picked dealers," Jackson "In doing so, they are wreckingh many lives." The impact will be felt especially strongl in rural parts of Colorado, he where planned GM and Chrysler shutdowns may leave auto ownersa hundreds of miles from the nearest dealership. Jacksonn expects that dealers for Japanesed automakers may soon move into communities abandonec by thetwo U.S. companies.
Already, he a Toyota dealership is moving into Fort where a Chrysler store is slated for He said he and some car dealersz plan to travel to Washington to try to convincwe lawmakers to come tothe dealers' aid. Jackson also note that under the GM Chapter11 plan, the federalo government would wind up with a majority stake in the and "no one thinks that is a good The May 14 GM lettee to dealers, a copy of whichy was obtained by the Denver Busineses Journal, said the automaker reviewesd each of its dealers' sales volume, profitability, capitalization, locatioh and facilities along with othed "market patterns.
" "Based on our review and current and foreseeablde market conditions and your dealership's historical performance, we do not see that SM can have a productivde business relationship with [name of dealership] over the long term," said the The letters gives dealers the optio n of submitting information as an appeal of the decision. GM said Mondayu it expects that it will sever ties with morethan 2,000 dealers nationwide before emerging from bankruptcy. Like Chrysler, GM said it'ss suffering from an overcrowded dealer network that underperforms in termwof per-store sales in relation to Toyotwa and other Japanese automakers.
On May 14, plansz to eliminate 789 or about 25 percent of its including at least 12 of its 44 dealershipsain Colorado.