U.S. auto dealer representatives will meet with the government task force charged with retooling the auto industry on Thursday to make the case that a bankruptcy for General Motors Corp
The National Automobile Dealers Association, which represents about 20,000 U.S. new car dealers, also plans to tell the autos task force that a radical cut in the number of GM's dealers would make the struggling automaker less viable, its chairman told Reuters.
The meeting comes as GM rushes to meet a June 1 deadline to prepare deep cuts in debt, labor costs, dealership network and brands to prove that it can return to profitability.
The Obama administration has said GM could be put through a quick bankruptcy restructuring process if it fails to achieve sweeping cost cuts by the deadline.
We don't think bankruptcy will work either for GM or Chrysler, NADA Chairman John McEleney said in a phone interview. It could be that the surgery is successful but the patient still dies.
GM Chief Executive Fritz Henderson said on Friday the automaker was readying detailed plans for a bankruptcy filing that now appears more likely even as it races to complete a business plan under federal oversight.
Henderson also said the automaker was accelerating its plan to reduce the number of dealers as it rushed to meet a June 1 deadline to restructure under U.S. government oversight.
Sources briefed on GM's turnaround plan told Reuters earlier last week that the automaker was accelerating its timetable for closing about 1,700 dealerships.
Dealers are the only customers auto manufacturers have, McEleney said. The marketplace determines who's going to survive, but it doesn't save the manufacturer any money in the short term to eliminate the dealers.
Automakers book revenue when vehicles are shipped to dealer lots, not when the vehicles are sold to customers.
GM ended 2008 with more than 6,200 dealers in the United States and had presented a plan to the task force, run by former investment banker Steve Rattner, that would have cut that figure by about 25 percent over the next five years.
The task force rejected GM's dealer consolidation plan as one element of a turnaround that officials said did not go far enough or move fast enough.
During the talks with the task force, the dealer representatives will also argue that the Obama administration's focus should be restoring credit availability for consumers and dealers, McEleney said.
Shares of GM were unchanged at $1.70 on the New York Stock Exchange.
(Additional reporting by Kevin Krolicki; Editing by Matthew Lewis, Phil Berlowitz)