DETROIT -- General Motors CEO Fritz Henderson said the automaker will start notifying its dealers a bit later this week on its plan to eliminate about 2,700 dealerships by 2010.
That specific plan is being finalized here early this week, and well began notifying dealers later this week, Henderson told reporters during a weekly conference call this morning.
Henderson also said bankruptcy is more probable now given the objectives that we set for ourselves. But he would not quantify the likelihood of bankruptcy saying there is still a chance we can do it outside of bankruptcy.
GM, staying afloat on $15.4 billion in U.S. loans so far, is grappling with a government-imposed June 1 deadline to reach agreements to restructure operations and cut more than $40 billion in total debt.
Over the last several days, GM executives increasingly have signaled the possibility of a bankruptcy filing as the automaker has made little progress in negotiating with its bondholders. GM wants bondholders to take 10 percent of stock in the reorganized company in exchange for about $27 billion in their debt.
Representatives of GM bondholders have said they are being offered an unfairly low payout. They have asked instead for a majority stake in the restructured company.
The government didnt support us going above 10 percent, so we went to the maximum that they would allow us, Henderson said of the debt exchange offer.
Dealership time frame
Henderson said GM was still working on a time frame for how soon a dealership would have to close if it was selected to shutter.
We would try to work with our dealers for an orderly wind down, he said.
That wind down would include GM buying back dealership signage, special tools and dealers unused inventory. GM also would honor all warranties and work with dealers to make sure customers know they will continue to be serviced by other GM stores.
This is not a one-month process, Henderson said. This is something that would take place over a reasonable time. This is not something measured in weeks or months. Its work that would take place over 2009.
The National Automobile Dealers Association has taken a strong stance against GMs move to slash dealerships, arguing it would hurt GMs market share and destroy millions of jobs.
When asked to react to that, Henderson said: Were going to try to do the right thing for our customers and the right thing to be competitive. I dont have any further reaction to that. Our plan has sacrifices from a number of parties. We appreciate the support weve gotten and well try to handle our dealers in a responsible way.
Hummer, Saturn updates
On other topics:
GM received 3 offers to buy its Hummer brand several weeks ago. GM is negotiating with two parties today to come to acceptable terms for a sale. Its something were working on every week, Henderson said. If there is a deal to be had, I think we can reach something by the end of this month.
While GM has said it will sell the Saturn distribution network, it would be open to a buyer who also was interested in a possible manufacturing partnership with GM on behalf of Saturn. But Henderson said: To date we havent seen any interest in that regard, but thats something wed be open to.
GM will make more salaried job cuts. Henderson will have the plan for those cuts and announce how many jobs will be cut it by the end of May.
There are a number of parties interested in buying Saab, Henderson says. Saabs reorganization and sale is being in Sweden. A resolution on Saab will happen during the next month or two.
When asked to respond to rumors that GM might move its world headquarters from Detroit, Henderson said: We were looking at frankly everything within our business, but its not like we have this queued up at the top of our list. We dont have any such plans, but if we did it would be motivated by business rationale such as cost efficiency and speed.
GM is speaking with multiple bidders regarding a partnership with Opel and its target is to have an agreement before the end of this month.