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GM will let rejected dealers apply for new stores Dealer group says that's not good enough

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GM will let rejected dealers apply for new stores

Dealer group says that's not good enough

NEIL ROLAND

AUTOMOTIVE NEWS

NOVEMBER 11, 2009 - 3:13 PM ET

WASHINGTON -- General Motors Co. plans to open a number of new dealerships around the country and has been inviting some rejected dealers in those areas to apply, but a dealer group says that plan is inadequate.

GM is “in the process of re-establishing select points in certain markets around the country as part of our ongoing analysis of our dealer consolidation efforts,” company spokesman Greg Martin said.

He declined to say how many new franchises would be awarded, where they would be or when new dealerships would be opened.

Martin's e-mail said any dealer whose stores are being shuttered can submit a proposal. He declined to say what criteria GM would apply.

The spokesman disclosed the contents of a letter that GM sent to congressional leaders in September. In it, GM said the company would review any rejected dealer's application “in line with its normal business procedures.”

GM will “select the proposal that it determined was the best one for that particular market,” the letter said.

In recent weeks, at least a dozen rejected dealers have received letters from GM inviting them to apply for new dealerships, said Tammy Darvish, a leader of a group of rejected dealers known as the Committee to Restore Dealer Rights.

Dealers in several states

Recipients of these GM letters have been found in Pennsylvania, Illinois, Michigan, Ohio, Colorado and Massachusetts, Darvish said. Some of the franchises are to be opened in metropolitan areas and some in rural areas.

At least a couple of rejected dealers near the new dealerships have not been invited by GM to apply, she said.

“The GM terms are inadequate,” Darvish said.

In September, dealer groups including Darvish's and the National Automobile Dealers Association proposed that rejected dealers be given the inside track on any new stores.

Rep. Chris Van Hollen, D-Md., the assistant to House Speaker Nancy Pelosi, also has said rejected dealers should be given preferential consideration on any new franchise.

NADA spokesman David Hyatt declined immediate comment today.

GM's e-mail comes as it prepares to resume settlement talks tomorrow with the dealer groups after a four-week hiatus.

More talks with Chrysler?

Dealer groups also are trying to schedule another meeting with Chrysler Group.

“It is the opinion of the committee that neither company has been negotiating with us in good faith,” Darvish said in an e-mail to members today. “We believe they are trying to ‘run out the clock.' ”

At the encouragement of congressional leaders, dealer talks with GM and Chrysler began Sept. 30 as an alternative to legislation that would reverse dealer terminations. The bill passed the House but stalled in the Senate.

During the talks, Chrysler has said it plans to open 103 new franchises after closing 789 as part of bankruptcy proceedings last spring.

GM has told about 1,300 dealerships of plans to close them down by October 2010 in an effort to end up with 3,600 to 3,800 stores, including about 1,500 in rural areas, CEO Fritz Henderson has said.

Henderson told Michigan lawmakers last month that the company might restore a limited number of franchises that were mistakenly terminated, but he would not agree to new compensation for any dealers, said Rep. Pete Hoekstra, R-Mich.

Hoekstra also said at the time that he thought GM was stalling in negotiations.

Edited by NINETY EIGHT REGENCY
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