GM to close 1,100 dealerships

DETROIT, May 15 (UPI) -- U.S. auto giant General Motors Corp. said Friday it would severe ties with 1,100 car dealerships, a day after Chrysler cut 789 outlets.

Susan Garontakos, spokeswoman for GM, said the dealerships would have until October 2010 to close. But many are expected to close this year, CNNMoney.com reported.

In time, GM said it will pare down to 3,600 dealerships, a 40 percent total reduction.

In a statement, the U.S. Treasury said trimming dealerships at GM and Chrysler "has given both companies a new lease on life," by helping prevent company liquidations.

Analysts said the move could push GM into a legal corner that makes bankruptcy inevitable. Closing dealerships without declaring bankruptcy could lead to legal clashes with the outlets that were forced to close, CBS News reported.

About 600 of the dealerships notified Friday sold primarily Pontiac, Saab, Hummer or Saturn brands, which the company expects to close out or sell, CNNMoney.com said.

Even before the announcement, about 300 GM dealerships closed this year due to a prolonged sales slump that has crippled the automotive industry.

GM, which has accepted $15.4 billion in federal loans, has until June 1 to trim its debt and find union concessions to qualify for more federal assistance. It has already said it would close 16 factories this year and lay off 27,000 workers.