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Hope on the horizon? General Motors reportedly to reinstate more than 580 dealers


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Filed under: Government/Legal, Hirings/Firings/Layoffs, GM


According to Automotive News (which is citing four separate yet unknown sources), General Motors is preparing to reinstate more than 580 dealers that had applied for government-mediated arbitration to keep their franchises in the United States. For those keeping track, 580 represents exactly half of the 1,160 dealerships that signed up to go through the arbitration process. These selected dealerships would potentially be reinstated outside the process of arbitration.

GM will reportedly send letters to the 580-plus dealerships it has decided to reinstate, offering immediate restoration of their franchise rights, including the ability to order new vehicles. If a dealership does not receive a letter, GM has not chosen to restore its franchise rights and it will have the option to either settle with GM or enter the arbitration process if it so desires.

For those dealerships that aren't successful in their quest to regain franchise rights, well... there's always Sears, right?

[source: Automotive News - sub. req'd | Image: Justin Sullivan/Getty Images]

Hope on the horizon? General Motors reportedly to reinstate more than 580 dealers originally appeared on Autoblog on Fri, 05 Mar 2010 13:28:00 EST. Please see our terms for use of feeds.

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Hundreds of GM dealers could get their stores back

Details to be released this afternoon



General Motors is preparing to provide some of its dealers with rejected franchises an opportunity to reinstate their stores, and the Detroit automaker plans to provide details during a Webcast today at 2 p.m.

Last year, GM sought to wind down about 2,000 dealerships as part of its government-backed bankruptcy restructuring.

A person close to the situation said today that GM plans to send a letter of intent to several hundred dealers who were identified to have their franchises pulled.

The letter will provide the dealers with instructions on how to apply for reinstatement, but those dealers must meet a number of qualifications, such as having adequate capital to operate and available financing, the person said.

“What’s the criteria? That’s the million-dollar question,” said Tammy Darvish, a dealer who has been involved in negotiations with GM in an effort to win reinstatement for a group of 1,160 dealers who are protesting GM’s decision to shut them down.

GM’s criteria for reinstating dealers, Darvish said, “was always the hang-up” during negotiations between the protesting dealers and GM.

Darvish, vice president of Darcars Automotive Group in Silver Spring, Md., said she expects that a large percentage of the dealers who will be offered reinstatement will be Cadillac dealers.

Darcars Automotive Group has one Chevrolet dealership affected by GM’s initial plan.

In February, Mark Reuss, GM’s North America president, told journalists gathered at the National Automobile Dealers Association convention in Orlando that the automaker hopes to settle as many of the disputes as possible outside of arbitration.

GM ended 2009 with about 5,700 dealers, which includes dealerships that GM is trying to wind down or that are slated to lose a brand.



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GM could bring back 661 shuttered dealers

Robert Snell / The Detroit News

General Motors Co. is expected to restore more than half of the 1,160 dealers who have appealed the automaker's attempts to close them down, according to a source familiar with negotiations.

GM is sending letters to 661 dealers by Monday night offering to reinstate their stores -- if they comply with standard requirements for facilities, capitalization, inventory financing. The balance of the 1,160 dealers who have appealed will continue toward arbitration.

Settlements could help GM end a lingering dispute that dates back to the automaker's bankruptcy-related decision to prune its vast U.S. dealer network. The reduction effort, which has upset retailers who claim they were not given any justification and rankled politicians in Washington, D.C., was aimed at cutting GM's costs and boosting the number of vehicles sold at remaining dealerships.

"This is the end of what has been a really tough time for lots of people inside and outside the company, lots of communities and lots of dealerships," GM North American President Mark Reuss said. "We are looking forward to wiping the slate clean."

Dealers have 10 days to sign the letters and return them to GM and have 60 days to fulfill requirements itemized in the letters.

Reuss would not provide a breakdown of the 661 dealers by brand, size or region. When GM thinned its dealership ranks last year, a disproportionate number of Cadillac dealers were targeted along with stores in metropolitan areas.

GM will provide an update later today on the status of settlement talks between the company and dealers who are appealing to have their stores restored. Dealer Tammy Darvish, vice president of DARCARS Automotive Group in Silver Spring, Md., owns a Chevrolet dealership ordered closed by GM. She said news of the reinstatements means little until dealers know the strings attached.

"They could make it cost-prohibitive or they could set conditions like they need 30-year site control of our properties, which is what Chrysler is doing," said Darvish, who has fought to have dealerships restored nationwide. "It should be as simple as if the dealerships are viable and sustainable, they should be reinstated."

Even with the restored dealerships, GM will have a smaller dealer network than before it filed bankruptcy last year.

GM has about 5,500 dealerships today, down from 6,150 at the end of 2008. That number will fall to about 4,100 this fall once dealerships who were not offered new franchise agreements close or stop selling GM vehicles.

Previously, GM has said settlements could include reinstating dealerships or perhaps paying retailers to drop their appeals.

Settling outside of arbitration also could help GM better plan vehicle production schedules in upcoming quarters, Reuss said.

As part of GM's restructuring, GM planned to close more than 2,000 dealers by October as it sheds four brands and shrinks its footprint.

Dealers filed for arbitration under a law approved by Congress in December that gives closed or closing dealers the right to challenge the decisions.

GM Chairman and Chief Executive Edward Whitacre Jr. has said any decisions to reinstate dealers wouldn't hurt the company.

In January, Whitacre said that GM is likely to reinstate "hundreds of dealers," but then backpedaled and said it could be as few as 100. He has taken a more conciliatory approach to the dealer issue, acknowledging GM likely made some mistakes in its dealer closings.

From The Detroit News: http://detnews.com/article/20100305/AUTO01/3050420/1148/auto01/GM-could-bring-back-661-shuttered-dealers#ixzz0hL4FVlzG

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GM Backs Off Dealer Reductions; Reinstates 660 Targeted Rooftops

By James M. Amend

WardsAuto.com, Mar 5, 2010 4:28 PM

General Motors Co. softens its pre-bankruptcy plan for shrinking its U.S. retail footprint, reinstating half of the dealerships appealing closure.

“We are highly confident this is the right size with the right quality,” GM North America President Mark Reuss tells journalists during a conference call today to update the auto maker’s dealer arbitration process.

The auto maker argued fewer dealers will enhance the throughput and profitability of those remaining, allowing store owners to invest more into their operations and compete better against newer franchises from rivals such as Toyota Motor Corp.

But responding to the outcry from dealers and local communities, Congress pushed GM to rethink the reductions, as well as offer the option for arbitration, and the auto maker ultimately offered participation agreements to 4,100 dealers.

Some 1,100 of 2,000 eligible dealers asked to arbitrate, and today GM says 660 will be reinstated.

GM will offer arbitration to the 440 other dealers, although Reuss says the preference would be to settle outside of legal action. That would ultimately leave the auto maker’s network somewhere between 4,100 and 5,500 rooftops.

“It’s the right number, with the right performance, with the right people – all of those things,” Reuss says.

GM Vice President Susan Docherty, who heads and marketing and until a broad North American restructuring earlier this week also led sales and service, says the auto maker’s dealer footprint will shrink satisfactorily – but exactly how far remains a question.

“In terms of where all this is going to end up by the time we get all the dust settled by midsummer remains to be seen,” she says. “But the headline here is that our network will be smaller than it was prior to us going into bankruptcy.”



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Well, you don't want to disappear either.

I'm interested to see where this goes.

GM wouldn't "disappear having few dealers. IIRC Toyota still has fewer dealer and that didn't stop them from surpassing GM in sales last year.Don't forget that thr economy is nowhere near being anything remotely resembling recovered, and auto sales are still way down from 2007.

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GM says it will reinstate 661 rejected dealerships

Chrissie Thompson

and Neil Roland

Automotive News -- March 5, 2010 - 10:28 am ET

DETROIT -- General Motors Co. said today it plans to reinstate 661 of the 1,160 rejected dealerships that applied for arbitration to get their franchises back.

The decision to begin settlement procedures as early as next week and reverse many of the company's post-bankruptcy dealer cuts stemmed from a desire to avoid the time and expense of congressionally mandated arbitration, GM executives said.

"By doing this we save a lot of time and energy and dollars," Jim Bunnell, GM's general manager of dealer network support, said on a conference call.

Susan Docherty, GM's U.S. marketing chief, said the company decided "it would have been impossible to arbitrate 1,100 cases in a 120-day period."

The new law signed by President Barack Obama in December requires that arbitration be completed by mid-June. Arbitrators had the option of a one-month extension.

GM moved to reinstate 661 of the 1,160 dealerships that applied for arbitration after GM planned to wind down about 2,000 entire and partial dealerships last year before its Chapter 11 reorganization.

GM plans to call all 661 dealers designated for settlement by Monday to notify them of its intent to begin settlement talks, Bunnell said. It will start sending letters of intent about Wednesday, March 10, for dealers to sign and return within 10 days, he said.

Dealers will then have another 60 days to send documentation complying with requirements in the letter, such as working capital, location, licensing, and floorplan financing. They also will have to return any wind-down money they received from GM.

At that point, if dealers comply with all the requirements of the letter of intent, they can start receiving cars from GM to sell, Bunnell said. They also will be offered a replacement dealer agreement effective Nov. 1, he said.

The 500 or so dealers not designed for reinstatement can still ask to be considered for settlement talks, Bunnell said. Absent any more talks, GM will arbitrate the remainder, he said.

GM North American President Mark Reuss said he expects almost all of the 661 dealerships to satisfy the requirements in the letter of intent and be reinstated.


1. Mon., March 8 - Each of the 600 dealers designated for settlement will be called.

2. Wed, March 10 - GM will start sending letters of intent to dealers.

3. Within 10 days of receipt of the LOI, dealers must sign and return it. The LOI will set forth all requirements for purchase of new or existing point.

4. Within 60 days after that: Dealers must send documentation satisfying the criteria for reinstatement. These criteria include capital, facilities, location, licensing and floor-planning. Dealers also will have to return any wind-down money they received.

5. Effective Nov. 1, a replacement dealer agreement will go into effect if all the criteria have been satisfied.

PRESS RELEASE: GM Statement Regarding Dealer Arbitration


DETROIT – 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 1100 dealer reinstatement claims that were filed with the American Arbitration Association. We conducted these individual reviews, keeping in mind our goal of moving quickly and effectively to complete the overall arbitration process, and determined that we would send more than 600 Letters of Intent to the involved dealers. The Letter of Intent contains our usual core business criteria. This action will allow these dealers to conduct normal dealership operations as soon as they comply with the terms of the Letter of Intent.

“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,” said Mark Reuss, president, GM North America. “The arbitration process creates uncertainty in the market. We believe issuing these Letters of Intent is good for our customers, our dealers and GM.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100305/RETAIL07/100309917/1400#ixzz0hLErYTO0

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GM wouldn't "disappear having few dealers. IIRC Toyota still has fewer dealer and that didn't stop them from surpassing GM in sales last year.

I agree most other companies do as much or more with 1/2 the dealers.

I think GM is just avoiding legal and goverment hassles. They could go to court and win but at what cost?

I wish they would set a standard for service and hold the dealers to it. Those who don't pass get axed. The only issue would be placment of the dealers if you lost too many in one area and not enough in theres. Making good dealers more profitable is key to a strong dealer network. Right now in many areas we have Chevy dealer fighting Chevy dealer for the sale and not Chevy fighting Ford or Honda.

The more profitable the dealer the stronger they would be and better suited to provide better service to the customer.

Edited by hyperv6
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