DETROIT (AdAge.com) -- General Motors Corp., speeding up its overhaul in a bid to survive, plans to shut half of its 6,200 U.S. dealerships by 2014 and phase out its Pontiac brand by next year, Automotive News reported today.
The dealership reduction, from 6,246 at the end of last year, marks a sharper decline than forecast on Feb. 17, when the count was projected to fall 34%.
GM's revised viability proposal submitted to the U.S. government today also said the automaker will offer stock to debt holders to reduce its crushing debt load. GM said it will file for bankruptcy unless a sufficient number of debt holders agree to take stock before a government-imposed deadline of June 1. The company estimates that the swap must cover at least 90% of its unsecured debt to satisfy the Treasury Department.
"We only want to do this once," said CEO Fritz Henderson, who took over from the ousted Rick Wagoner a month ago when the U.S. auto task force rejected GM's Feb. 17 plan as too tame. "Our objective is to make this a defining moment for the corporation."
GM, surviving on $15.4 billion in U.S. loans and seeking to double that amount, cautioned that it will be up to Treasury to decide whether enough debt had been exchanged. If the swap is successful, bondholders will own about 10% of GM. Should GM file for court protection, it may sell most of its assets into a "New GM," under section 363 of the U.S. Bankruptcy Code. Under this so-called Good GM/Bad GM plan, assets that don't become part of New GM would be liquidated.
The automaker will continue to invest in four core U.S. brands: Chevrolet, Cadillac, Buick and GMC. In its earlier strategy, Pontiac was to continue as a niche marque.
The company also said that it is accelerating plans to spin off, sell or close Hummer, Saturn and Saab. Their futures will be resolved this year. In the previous, Feb. 17 restructuring plan, rejected by the Obama administration's auto task force, GM planned to determine the brands' fates before 2011.
GM said it has received final bids from potential buyers of Hummer. The company expects to make a final decision on Hummer's sale or phase-out in early May. Proposals to sell Saturn's distribution operations are being reviewed.
The automaker expects to offer 34 U.S. nameplates in 2010, down from 48 last year. Marketing support will be "competitive," GM said. From 2010 through 2014, only one nameplate will be added.
~ ~ ~
Jamie LaReau contributed to this report.