Extended coverage

• GM to sell Hummer to Chinese company

• U.S. sales of cars and light trucks rose 13% in May when compared with April

• Government now has 35.4% stake in GMAC

• How to market cars amid bankruptcy

• Public policy, corporate roles could blur with GM

A day after filing for bankruptcy protection, General Motors sent ultimatums to all its 6,000 U.S. dealers Tuesday: Follow our new rules or face almost immediate franchise cancellations in court.

For the 2,000 dealerships targeted to lose their franchises, GM said it will soften the blow if those retailers don't oppose the automaker's restructuring plan.

The dealers that GM is keeping learned that sales quotas will go up, that they might have to remodel showrooms and that selling competing brands at GM stores could be discouraged.

Pat O'Brien, owner of three Pat O'Brien Chevrolet locations in Northeast Ohio, said GM was treating dealers more humanely than Chrysler, which in mid-May told some dealers they would lose their franchises June 9. Still, he said, GM dealers losing franchises will suffer greatly.

"I don't feel lucky that my store survived," O'Brien said. "I feel horrible for the families" running dealerships slated to lose franchises. "If any dealers feel good that someone else is going out of business, they shouldn't be a dealer."

VIDEO: Plain Dealer auto Reporter Robert Schoenberger chats with Mike McIntyre about the GM bankruptcy and its ramifications to Northeast Ohio.



The GM Bankruptcy: More to the Story

All three of O'Brien's stores got letters Tuesday via FedEx telling them that GM plans to continue supporting them.

GM has not publicly stated which dealerships will lose their franchises, and that list may never become public. Chrysler's cancellation list came out in court filings, but GM is encouraging dealers to settle out of court.

Dealers on the list to be canceled will get some cash and help selling their parts, equipment and inventory in exchange agreeing not to challenge GM's bankruptcy plans.

"They're just asking for things you normally ask for in business," said Tom Ganley, owner of the Ganley Auto Group.

Ganley, whose dealership is among the survivors, pointed out that if dealers don't agree to GM's terms, the automaker could cancel their franchise contracts in bankruptcy court. GM said in its filing Monday that it now plans to eliminate hundreds more dealers, for a total of about 1,500.

In all, the automaker expects to cancel the franchises of about 2,000 stores, including about 500 Saturn, Hummer, Saab and Pontiac dealerships. GM plans to sell or close those brands. GM said Tuesday it has a deal to sell Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery Co., a maker of large industrial equipment.

GM and Chrysler have both said they needed to cut the number of dealerships because the companies no longer sell as many cars as they once did. Economists said that having a small group of more profitable dealerships could allow GM to raise prices to dealerships without increasing the prices that consumers pay.

Paul Firment, vice president and co-owner of Joe Firment Chevrolet in Lorain, said he isn't happy about competitors losing their franchises, but it could help his store.

"With there being less dealerships in each area, they expect each dealership to cover a little more area," Firment said.

With GM's conditions for dealers now clear, Kevin Joyce, co-owner of Joyce Buick, Pontiac, GMC in Lorain, said he can get back to focusing on selling cars. He added that the lead-up to bankruptcy has been a major distraction for both GM and car buyers.

So who comes out on top? In Joyce's mind, the biggest winner was the delivery company.

"FedEx must have been busy today," Joyce said. "I'm amazed that they got to everyone so fast. That's the business to be in."