According to an article published on CNBC.com, the after effects of GM and Chrysler going bankrupt will more than likely spawn other “Bankruptcy Babies” ranging from suppliers to dealers.  The White House declined to comment on the decision by some General Motors Corp. (GM) executives to sell their shares in the struggling auto maker after news reached the public that GM shares were reported at their lowest level since 1933 on May 12, 2009.

According to CNNMoney.com, the company is facing a government-imposed June 1 deadline to reach a pact with workers and creditors that keeps it out of bankruptcy court.  Meanwhile, back at the ranch, this week, Chrysler and GM will notify over 3,000 dealerships around the country that they are being dropped. For some, this will mean shutting down shop entirely while for others who sell Chevy, GMC, Chrysler, Jeep, etc, it will mean that they may still get the chance to eek out an existence.  And according to CNBC.com, this is the part of the auto industry story that hasn’t received much attention:

Those close to the industry estimate up to 20 percent of the dealers are over-leveraged.  They’ve borrowed heavily over the years to expand their businesses.  Whe industry sales were running at 15 or 16 million a year, there was enough volume to make a profit and service the debt.  But with sales running below 10 million, those dealers are getting squeezed.  Take away their relationship with GM or Chrysler, many of these dealers will have no choice but to go bankrupt.

If you own a car that was manufactured by GM or Chrysler and it’s under warranty, I highly recommend getting any and all service stuff taken care of soon…

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