General Motors, the largest U.S. automaker says it is not renewing franchise agreements with close to 1,000 dealerships across the country. The move comes a day after smaller rival, Chrysler, announced it is closing nearly 800 dealerships next month. Many auto dealers are feeling the pain as struggling automakers slash costs in the worst sales slump in nearly three decades.
This is a day Stanley Balzekas never thought he would see: the end of his company, one of Chicago's oldest Chrysler dealerships.
"They do not want us to be a Chrysler dealer anymore. It's very hard for me. The time has come," he said.
The news arrived by express mail in corporate language that left Balzeka's daughter, Carole feeling betrayed.
"This type of letter is just a shame to send to somebody who has been in business for 90 years," she said.
The dealership is just one of many casualties of the auto industry. On Thursday, Chrysler notified almost 800 of its roughly 3,200 dealers that they must shut down by June 9.
On Friday, 11,100 GM dealers received similar notices.
Paul Taylor of the National Automobile Dealers Association says the closures should not come as a surprise.
"There has been a tremendous loss of market share both by Chrysler brands and the GM brands in recent decades," said Taylor.
Jack Fitzgerald owns several GM and Chrysler franchises in Maryland. He has never laid off an employee, but that may soon change. He says he feels a little bit embarrassed
"None of this is necessary, and none of this is going to save a penny for Detroit," He added.
But industry expert John Casesa says the cuts will help reduce competition among dealers for car buyers.
"Fewer, more profitable dealerships is better than having thousands of smaller, less profitable dealerships," he said
The cuts will affect nearly one quarter of all Chrysler and GM dealerships across the United States.
Industry experts warn, don't be surprised if the cuts translate to bigger price tags for car buyers.