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May 15th, 2009
12:00 PM ET

Financial Dispatch: GM Dealerships Hit Hard

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/US/04/14/gm.recall/art.gm.logo.afp.gi.jpg]

Gene P. Bloch
Managing Editor
CNN New York

CNNMoney.com was the first to report this morning that General Motors has notified 1,100 dealerships targeted to be shut down. The company has indicated up to 2,600 of its dealerships – or 42% – will be closed over the next year. Unlike Chrysler’s announcement Thursday which detailed a list of 789 dealers as part of filing in bankruptcy court, GM says it will not put out a master list of dealers that are hearing from the company today. As CNNMoney reports, metro area and suburban dealers are expected to feel the biggest hit.

GM has a conference call to discuss its strategy on noon today – it’s headed toward a June 1 restructuring deadline, and a Chapter 11 filing is looking increasingly likely.

No relief at the gas pumps – AAA reports regular unleaded rose 9-tenths of a cent to $2.29 a gallon, the 17TH straight increase. The average price is still 44% lower than last July.

In today’s Energy Fix, gas prices should go down if electric cars hit the market in large numbers. When that times comes, car shoppers will find the new vehicles look different than what’s on the road right now. The GM and Ford designers we talked to said that taking out the internal combustion engine and the cooling system that goes with it, a whole new world of design possibility opens up. Ford is even taking it’s inspiration from nature… fish and other animals!

A trifecta of decent economic news this Friday – the Reuters/University of Michigan index of consumer sentiment rose to an eight month high, while the Consumer Price Index was unchanged in April, right in line with expectations.

And Industrial production was down 0.5% in April – but that’s the smallest drop in six months.

The latest recipients of federal assistance under the TARP – or Troubled Asset Relief Program – is life insurers, as they too have been suffering in the economic crisis.

Six of those companies – Allstate, Ameriprise Financial, Hartford Financial Services Group, Lincoln National Corp, Principal Financial, and Prudential Financial, have qualified for TARP money, according to the Treasury Department.

In California, Gov. Arnold Schwarzenegger is threatening to sell off San Quentin and other state properties if his proposed budget cuts fail. He estimates the state prisons would have to release up to 38,000 prisoners, half of them illegal immigrants.

On CNNMoney today:

ROAD TO RESCUE

  • Credit cards and gun rights – Huh? A new wrinkle in the congressional effort to legislate curbs on credit card issuers: an unrelated provision to allow guns in national parks.
  • Where does Obama stand with his tax reform task force? It's been 6 weeks since he formed it and still hasn't named members.

* AIG 'bonusgate': Lessons learned. As anger resurfaces about AIG's controversial bonuses, lawmakers say a perfect storm may be forming for broad action on compensation reform.

HOUSING

  • Obama's mortgage rescue plan – What still stands in the way
  • Treasury's anti-foreclosure incentive program – Giving $1,500 to lenders for ceding the deed.

BANKING/WALL STREET

* Bank execs feel new 'stress.' Some financial firms may have little choice but to shake up their board room - and some top officials could also be at risk.


Filed under: 360° Radar • auto bailout • Economy • Finance • Gene Bloch • Unemployment
soundoff (5 Responses)
  1. peoriamark

    Unions have served their time. They are a huge reason for the collapse of the US auto industry. All those raises and benefits drove up the cost of the cars while the union protected autoworker saw no reason to produce a car that can last more than 4 years. Buy an import, they are cheaper, more reliable, more fuel efficient, and they are made in the US with foreign technology and NO union costs and influences.

    May 16, 2009 at 12:33 am |
  2. cat

    How upsetting, I only buy American Cars, because I know w/out a doubt
    That American Auto is essential to American growth.
    It is sad to see that some Americans are such traitors, selling us out.
    If Americans like/Love japans and other foreign countries auto Products and want to give them sells that only benefit their government and economy, then maybe they need to pack their bags and live there.
    STAND UP FOR AMERICA !!!!BUY AMERICAN!!!!!

    May 15, 2009 at 3:04 pm |
  3. GF, Los Angeles

    I recall a story that Toyota (or was it Honda?) employs more Americans than GM does.

    The unions have destroyed the automobile industry by not doing what other non-union companies have done which was cut the pay scale and hours of their employees during these economic times. What they ultimately chose was to cause dealerships to close and in the end those workers will lose their jobs all because they wouldn't bend. Sad.

    May 15, 2009 at 2:56 pm |
  4. rosemary

    GM sell all the cars at a very low price to who ever wants to buy. This will help the company to sell the rest of the cars and also to not be too much in the whole. This will also help people who will need a car for transportaion.

    May 15, 2009 at 12:59 pm |
  5. Sandra

    Studies show that Liberals tend to drive Japanese cars. Pretty ironic, considering Liberals claim to be so American and support unions. Unions are way American cars cost more than Japanese cars. If more Americas put their money where their mouth is, the American Automobile industry wouldn't be in trouble.

    Support America, Buy American!

    May 15, 2009 at 12:31 pm |