GM to Notify 1,100 Dealers of Closings, Chrysler Has Already Informed 789 Dealerships

So what if you bought your car from one of the Chrysler or GM dealerships that's closing? Is your warranty still good?

Yes. But that doesn't mean your local dealer will be around to service your car. If you live in a metro area, there should be another dealer nearby to fix your car. But if you live in a rural area, getting that tune-up might now require a long drive.

The closings aren't all bad news. Those looking to buy a car, might find some bargains at dealerships who now have to quickly liquidate their inventory.

There is more news from GM today. Under the direction of the U.S. Treasury, the automaker is close to a deal with the United Auto Workers that would cut its hourly labor costs by more than $1 billion a year, the Wall Street Journal reported, citing people familiar with the discussions.

Labor costs have been one of the biggest factors in driving GM close to bankruptcy.

An agreement with the union could come early next week.

Chrysler is already in bankruptcy and its announcement to eliminate a quarter of its showrooms, some 789 dealerships was revealed in court documents filed Thursday.

Chrysler, which filed for Chapter 11 at the end of April to begin a merger with Italian automaker Fiat, told the bankruptcy court Thursday that its dealer network was inefficient, expensive and antiquated.

The network of 3,200 dealers currently operating across the country "substantially increases expenses and inefficiencies in the distribution system," the company said in a motion filed in the U.S Bankruptcy Court in New York.

Automakers Facing Bankruptcy

Pending approval by the court, the company plans to cut off underperforming dealerships by June 9.

The company said it targeted poor performing dealers, and those that sold a single brand -- Chrysler, Dodge or Jeep -- and those in areas, particularly cities, where dealers competed with one another. Though the company is losing 25 percent of its dealers, those dealers provided only 14 percent of sales volume, Jim Press, Chrysler's vice chairman and president, told reporters Thursday.

Chrysler, which took a $4.1 billion loan from the government, has seen a 46 percent drop in sales compared with the first four months of last year. It reported a $16.8 billion net loss for 2008.

"The bankruptcy process allows us a once in a lifetime chance to realign the dealership body," Press said. The company, he said, would have a "more profitable and powerful distribution going forward."

Chrysler for several years has been trying to consolidate its dealerships so all its brands are under one roof, but many dealers continue to just sell one brand.

Wade Walker, a Jeep dealer from Montpelier, Vt., whose family has been selling Chrysler-made cars since 1964, said news that he would have to close his dealership would cost him a quarter of his business and lead to layoffs.

Walker, like the other dealers, was notified by a letter sent by UPS Thursday morning that his business would be closed.

"I have been notified that I am one of the affected dealers, and I won't have a future with Chrysler," Walker told ABC News.

"I'm not happy. We've put so much into it. We've been a dealer since 1964. It hurts that they would do this after 45 years of dedicated service," Walker said. "I feel a little abandoned by them. I'm more worried about my employees and my customers.

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