Just days after Chrysler announced that it would trim its dealer body by 789 dealers by June, General Motors has notified 1,124 dealers that it would not extend their franchise agreements past October 2010. Chrysler was able to make swift cuts due to the flexibility afforded by the Chapter 11 bankruptcy. On the other hand, GM is proactively making business adjustments ahead of a potential bankruptcy filing later this month.

General Motors targeted the weakest dealers for these passive cuts, those that were underperforming from market share and profit standpoints, as well as customer satisfaction benchmarks. The advanced notice will enable those dealers to wind down the businesses and sell off their inventories, currently estimated to at 65,000 units. And notably, GM will not need to buy the vehicles back.

In addition to these dealers, GM’s reach is expected to diminish by 470 stores when the Hummer, Saab, and Saturn brands are sold or otherwise disposed of. Plus, 27 standalone dealerships will be abandoned when the Pontiac brand is phased out next year, leaving about 2,600 dealers intact that hand multi-brand stores.

In total, many of the dealerships losing their GM franchises sell products from other companies and may continue without interruption. GM has not released a list of affected dealers, as Chrysler did under its bankruptcy rules, so the details of who and where are not yet clear.

Mark LaNeve, GM Vice President of Sales Service and Marketing, said in a released statement, “… it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient.”

In a conference call with the media, conducted by LaNeve via OnStar from a Cadillac Escalade, he expressed compassion for the impacted dealerships, their staffs and communities, though remained committed to this move being in the long-term interest of General Motors.

“Long term, GM should have fewer, healthier dealers, maintaining GM’s current high customer satisfaction ratings, with more sales per outlet.”

Car buyers take note: Despite that GM is idling plants to reduce inventory this summer, the franchise reduction news may mean dealers will be hungry as ever to negotiate a great deal. Especially with Memorial Day sales just around the corner.

Auto industry sales have trended like an Olympic ski jump this past year, with pain felt in all corners, from budget-focused brands to luxury divisions. The trend continued in April, though there were some notable changes, as noted in Automotive News data. While sales were down 34 percent, year on year, there was an uptick in some sectors, enough to raise the annual forecast from a dreadful 9.1 to 9.5 million vehicles – still well short of the 16+ million that the industry had come to take for granted.

Nissan and Toyota proved to be the biggest losers in April, with sales declines of 37.8 percent and 41.9 percent, respectively. (Car shoppers take note, as increasingly aggressive sales incentives are expected.) Not one major company saw sales remain flat, though some did see their monthly numbers dip less than previously. Notably, Ford, Honda, and General Motors posted their smallest sales declines of the year in April, according to Automotive News.

The most significant story may be that Ford outsold Toyota. Ford Motor Company sold 133,979 vehicles in April, compared against Toyota’s 126,540. (FYI: General Motors sold 172,150 and Chrysler moved 76,682 units.)

An independent study conducted by the Aloft Group Inc. confirmed what we all knew: Ford has benefited from its “no thanks” stance toward federal aid, while its Michigan neighbors at Chrysler and GM have accepted billions in taxpayer money and still teetered on the brink of oblivion. (See: Obama Gives Tough Love to Chryser, GM.") According a report by the Detroit News, the Aloft study found a third of those surveyed said they "are more willing to consider buying a Ford since Ford chose to not take the bailout money."

The largest drop of the month came from Mitsubishi, which saw a 59.9 percent decline, down to just 3,919 models sold. The smallest decline was again Subaru, off just 6.7 percent from April 2008.

The modern carpocalypse is threatening to collapse and remake automakers and may lead to a new pecking order. Chrysler has filed for Chapter 11 bankruptcy and is proceeding with an alliance with Fiat, while GM kills Pontiac and pursues selling Opel. As dire as these times are, one glimmer of hope come from a recent R.L. Polk survey that found about 55 percent of customers are likely to go car shopping within two years. And half of the respondents claimed they were very or extremely likely to buy a domestic vehicle in order to help the economy.

We hope the economy has turned around by then, enabling consumers to make good on this pledge. In the meantime, car buying now will help the automakers keep the lights on, and in return, they are offering what are probably the best deals we’ll see before inventories are reduced from scheduled summer factory shut downs.

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