Many GM dealers won't discuss their future; saddest stories are those targeted by two makers

General Motors told 1,100 of its 6,000 dealers yesterday that their contracts would not be renewed, but refused to release a list of dealers, sending reporters in every state scrambling to find those targeted -- many of them in small towns, serving rural customers.

Many dealers "kept quiet, trying to figure out whether they would stay in business until their contracts expire in October 2010 or attempt to get out sooner," report Ken Bensinger, Andrea Chang and Tiffany Hsu of the Los Angeles Times. Some dealers "worried that even though they weren't named, GM could follow Chrysler into bankruptcy soon, opening the door for more cuts." GM has already said it might cut at least 500 more dealers, and those notified yesterday can appeal to the company for reversal of the decisions.

The New York Times notes, "Though G.M. says it still hopes to avoid bankruptcy and subsist on more government loans, Mark LaNeve, G.M.’s vice president for North American sales and marketing, acknowledged that the dealer cuts “would be hard to enforce” outside of court."

The L.A. Times, apparently calling GM dealers all over the country, found a talker in Allan Rose of Gloversville, N.Y. He "didn't suspect that he was part of the problem. Although his northern New York dealership is small, it's the only one of its kind for more than 30 miles in every direction, clear to the Canadian border. But he too got a FedEx letter."

The National Automobile Dealers Association's chief economist, Paul Taylor, "said the hardest-hit areas appear to be suburban communities and mid-size markets," the Times reports. "Those are the kinds of places, he said, that rely heavily on the spending, employment and tax revenue a dealer provides.He estimates that the average dealer employs close to 50 people and pumps $16.5 million a year into the local economy, including payroll, taxes, payments to vendors, advertising and charitable giving." Thomas Klier, senior economist at the Federal Reserve Bank of Chicago, told the Times, "Every town has a car dealership. That's what was left out of this when the debate about the auto industry started." (Read more)

Some dealers handling both GM and Chrysler Corp. vehicles were hit with a double whammy. The New York newspaper found one in Middlesboro, Ky., and Jere Downs of The Courier-Journal of Louisville interviewed one in the semi-rural suburb of Mount Washington.