General Motors to Revive Bulk of Dealerships Slated to Close


Sometimes little guys do come out ahead -- that is, if you consider car dealers "little guys." General Motors said Friday it plans to revive some 600 dealerships the Detroit auto giant had planned to drop from its network. That's more than half of the more than 1,100 dealerships that filed arbitration claims last year to keep their doors open.

After reviewing dealer reinstatement claims filed with the American Arbitration Association, GM determined it would restore 661 of the 1,160 dealerships that filed,Automotive News reported. The approved dealers will receive letters of intent, effectively giving the dealers back their franchises as long as they comply with GM's terms.

"We are eager to restore relationships with our dealers, and get back to doing what we do best -- selling cars and taking care of customers," GM North America President Mark Reuss said in a statement. "The arbitration process creates uncertainty in the market. We believe issuing these letters of intent is good for our customers, our dealers and GM."

Who Survives?

GM is expected to publish a list of which dealers will be retained late on Friday, the Wall Street Journal reported.

The remaining dealerships, which GM intends to wind down before November, will not receive letters. GM will attempt to settle or arbitrate with them, Automotive News reported, citing sources familiar with the matter.

Amid bankruptcy last year, GM and Chrysler Group sought to reduce the number of dealers as part of their reorganization plans, arguing that their dealer networks were bloated. Both companies emerged from bankruptcy protection last summer.

Of GM's 1,350 dealerships targeted for closure, however, about 1,160 appealed through arbitration. Most of the targeted dealers fought back, and in December, the companies said they would reassess the future of franchises that were slated for closure or already shut down.

Greater Transparency

The review process was part of binding arbitration GM and Chrysler entered into to sidestep passage of federal legislation that would have compelled them to provide compensation to franchisees or reinstate dealership contracts. The two carmakers said at the time that they would review the closure lists and determine whether the decisions were business-based.

They also promised more transparency. GM, for example, agreed to tell Cadillac, Buick, GMC, and Chevrolet dealers how decisions were made, and provide face-to-face reviews with dealers that are still open, among other concessions.

"We end what has been a really tough time for lots of people inside, outside the company, lots of communities, lots of dealerships," Reuss said during a conference call with reporters Friday afternoon. "We're looking forward to wipe the slate clean."