GM tells about 1,100 dealers their franchises will be eliminated late next year

Dan Strumpf and Tom Krisher, AP Auto Writers
On Friday May 15, 2009, 12:25 pm EDT

Related: Ford Motor Co., General Motors Corporation
NEW YORK (AP) — A day after Chrysler LLC moved to eliminate nearly 800 dealerships, General Motors Corp. on Friday told about 1,100 U.S. dealers their franchises will be terminated late next year.

The cuts are part of a larger GM plan to slash 2,600 of its 6,200 dealerships as the automaker tries to restructure to become profitable again. The moves likely will cause the loss of thousands of jobs across the U.S. Local governments will lose thousands of dollars in tax revenue as dealerships are forced to close.

Both Chrysler and GM say they are cutting dealers because they have too many outlets that are too close to each other, and the competition drives down prices. But as the ranks of dealers thin and competition decreases, that likely will mean higher prices for car and truck buyers.