General Motors Corp (GM) said on Thursday night it would most likely pursue the same legal strategy as Chrysler if it were to spiral into bankruptcy, while Chrysler unveiled details for slashing its dealer network.
Rattling the industry further, the Financial Times reported on its Web site that Toyota Motor Co is planning one of the most drastic management shakeups in its 70-year history next month when Akio Toyoda, grandson of the company’s founder, takes over as chief executive.
Toyota will replace 40 percent of its senior managers and is said to be preparing a sweeping reorganization of its North American business that would unify sales and manufacturing arms, the report said.
In a bright spot, Ford Motor Co, the only Detroit automaker not taking government bailout funds or dogged by bankruptcy or bankruptcy expectations, told shareholders at the company’s annual meeting that restructuring is on track to be at or above break-even in 2011 excluding special items.
The GM disclosure, in a regulatory filing, marked the first time the automaker has said it would most likely follow the same legal strategy Chrysler is using under federal oversight to slash debt and restructure dealerships.
GM faces a June 1 deadline to restructure its bond debt and reach a sweeping deal with the United Auto Workers. The company restated in its filing with the Securities and Exchange Commission that it expects to seek Chapter 11 if negotiations with bondholders fall short.
Chrysler said it would terminate business with 789 of its 3,181 dealerships as of June 9, a move that could cost up to 40,000 jobs, according to the leading dealer trade group. Dealers in Pennsylvania, Texas, Ohio, Illinois and Michigan — where Chrysler is based — would be hit hardest.
“The bankruptcy process that we are in allows us a once-in-a-lifetime chance to achieve a right-sized dealer body,” Chrysler vice chairman Jim Press said on a conference call. “We do not have enough production or sales to keep all the dealers alive or prosperous.”
Chrysler sought permission from a US bankruptcy court in New York to terminate franchise agreements with the dealers. Fifty percent of its US dealers account for 90 percent of sales, according to court documents.
GM also plans to announce up to 2,000 dealer terminations as early as this week, sources have told reporters.
Chrysler and GM face pressure to bring large sales networks in line with those run by more successful automakers. Toyota has 1,200 dealers in the US.
Chrysler’s move to cut dealers will help it cement an alliance with Fiat. US antitrust officials said on Thursday the plan posed no competitive issues.
Separately, the German government said it wants Fiat and Austrian-Canadian parts supplier Magna to present proposals for partnering with GM’s European unit, Opel, within a week.
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