GM gives reprieve to 661 dealers

NEW YORK - General Motors Co. said yesterday that it would reinstate 661 dealerships it sought to drop from its sales network.

GM executives said 661 dealerships - more than half of the 1,100 seeking to stay with the automaker - would receive letters giving them the option to remain open. The company said it made the move because it would not have enough time to negotiate with all 1,100 dealerships within a four-month window imposed by the federal government.

"By doing this, we save a lot of time, energy, and dollars," said Jim Bunnell, GM general manager of network support, saying the company wished to avoid a "very large arbitration process."

GM would not offer any details yesterday about which dealerships it was reinstating and where they were located.

As part of its bankruptcy restructuring, GM last year told about 2,000 dealerships that it would not renew their franchise agreements once they run out in October 2010. The dealerships have said GM treated them unfairly, and last month Congress passed a law requiring an appeals process for the dealers. About 1,100 dealers have appealed GM's decision.

GM's move to keep the additional showrooms open effectively shrinks the number of appeals it has to contend with. Arbitration hearings for the dealers that do not get offers will begin later this month.

The cuts to GM's 6,000-dealer network were designed to compensate for much lower demand for cars and trucks. But some dealers have argued that many showrooms that are profitable are at risk of closing and that the automaker hasn't offered enough details about how it's choosing which businesses to shutter.

The company said it hoped to have every letter of intent to the affected dealerships by Monday. Dealers will have 10 days to respond and 60 days to meet a set of criteria that would allow them to stay with GM.

A spokeswoman with Chrysler Group L.L.C., which has cut 789 dealers, said the company was preparing a statement in response to questions about whether it also intended to reinstate dropped dealerships. Chrysler showrooms slated for closure are also appealing to stay open, though it remained unclear how many.

Talks between dealer groups and the automakers, brokered by Congress, began in September. But those talks stalled over disputes about the review process for targeted dealerships and other issues.

Looming over the fight has been the threat of federal legislation to deal with the closures. Lawmakers warned that if a deal wasn't reached, that legislation would move forward.

The White House has opposed the legislation over concerns that it could hurt GM's and Chrysler's efforts to rebound from their government-led bankruptcies.

Excerpts from GM's statement on keeping some dealerships open:

"General Motors is taking a major step toward its goal of creating positive,

lasting relationships

with its dealers."

"GM carefully reviewed each of the approximately 1,100 dealer reinstatement claims ... and determined that we would send more than 600 letters of intent."

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