GM Slashes 1,600 Franchises

General Motors Corp confirmed Friday that they will drop 1,600 U.S. car franchises ahead of an anticipated bankruptcy filing by the end of this month.

GM confirmed it planned to eliminate about 1,100 dealerships on the grounds that they are less profitable and weakly capitalized by letting their franchise agreements expire between now and the end of 2010. The automaker expects to drop another 470 dealerships from cutting its Saab, Hummer and Saturn brands, said GM spokesman John McDonald. After merging remaining dealerships, the plan is for GM to cut about 2,600 showrooms, or 40 percent of its U.S. retail network.

"We are telling them basically that you are not going to fit into the picture long term, but between now and then we will help wind the business down the best way individually with each dealer," GM spokesman John McDonald said.

GM dealers affected by the closure plans received letters by express mail on Friday morning informing them that the automaker did not see how it could have a "productive business relationship" after 2010.

Other GM retailers who did not receive the express mail learned that they had been spared. - Reuters