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GM to save 900 more dealerships than planned

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GM to save 900 more dealerships than planned

GM won't estimate how many jobs the decision will save


About 900 General Motors dealerships that the company had planned to cut loose appear to be getting a reprieve.

GM North America President Mark Reuss tells the Associated Press that the automaker should wind up with about 5,000 dealers in July. That's the end of a process that allows dealers to appeal GM's decision.

The company originally planned to have only 4,100 dealers across the country.

GM says it wanted to avoid the expense and time of the closures. Reuss and other new leaders at the company also feel shedding dealers isn't critical for GM to achieve profitability.

GM won't estimate how many jobs the decision will save, but an auto industry trade group says about 50 people work at an average new-car dealership.



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GM expects U.S. dealership count to be about 5,000 after arbitration

June 8, 2010 - 3:58 pm ET

Chrissie Thompson covers General Motors for Automotive News

When the dust settles this summer, GM expects to have about 5,000 U.S. dealerships.

The Associated Press broke the news today, citing North American President Mark Reuss, and GM spokeswoman Ryndee Carney told me the number “is consistent with what we'd thought.”

It's also consistent with estimates you've seen in Automotive News of between 4,500 and 5,000.

Reuss last talked with the AP a couple of weeks ago, Carney said, although the report only surfaced today. Since GM sent participation agreements to 4,100 dealerships last June, the AP estimated GM would reinstate about 900 stores.

GM last updated its arbitration and settlement situation on May 10, when Automotive News published its interview with Reuss from the previous week. As of May 10, Carney said, GM had received signed letters of intent from 600 stores and had about 300 more still in settlement talks or arbitration. Since those numbers include stores that were disputing GM's decision to cut just one (or two) of their GM franchises, we can assume GM had already settled with several more dealers. Carney confirmed that reasoning.

By the way, the newest dealership-count forecast is consistent with estimates you've seen in Automotive News of between 4,500 and 5,000.

We'll get the final count after July 14, the date the law requires GM to finish up its arbitration.

By the way, GM's dealership count this fall will compare with the goal the automaker had during its bankruptcy of trimming its network to 3,600 stores, using both forced wind downs and dealerships' going out of business.

Read more: http://www.autonews.com/article/20100608/BLOG06/100609874/-1#ixzz0qIQuoKq2

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Report: GM to reinstate more dealers

Robert Snell / The Detroit News

General Motors Co. may have about 900 more dealers than originally planned under a restructuring effort launched in bankruptcy court last year.

But the network's size won't be known until mid-July, when arbitration hearings between GM and dealers who have appealed closings are scheduled to conclude.

GM would not provide updated numbers Tuesday following an Associated Press report quoting GM North American President Mark Reuss as saying the automaker will end up with about 5,000 dealers in the U.S. by July. Company spokesmen said Reuss made those comments two weeks ago, and the numbers have changed.

GM has said reinstating more dealers would not derail its restructuring since emerging from bankruptcy court last summer with four fewer brands.

The move to reinstate more dealers likely preserves thousands of jobs nationwide and could smooth relationships with retailers who fought the closures and enlisted Congress' help in fighting GM's decision.

"We're not providing numbers. Those numbers change every single day," GM spokeswoman Ryndee Carney said. "We are talking to dealers who are trying to settle cases with us. We are going to arbitration hearings. Decisions are being handed down and those numbers change every day."

GM had about 6,000 dealers when the automaker filed for bankruptcy a year ago. It moved to terminated franchise agreements with about 2,000, arguing that a smaller network would save money and boost the average number of sales, and profits, at remaining locations.

The step toward shrinking to about 4,100 dealers nationwide triggered complaints from dealers, many of whom said there was no rationale for the closures.

In December, Congress ordered arbitration hearings for rejected GM or Chrysler Group LLC dealers who wanted to pursue it.

About 1,160 GM dealers challenged the forced closings and the automaker later offered to reinstate 666 of them.

About 600 dealers accepted GM's terms and are being reinstated.

The remainder of the dealers are continuing toward arbitration.

It was unclear how many jobs the move will save, but each new-car dealership in the U.S. employed an average of 53 people two years ago, before the auto-industry meltdown, according to the National Automobile Dealers Association. Using that average, GM's decision would save 47,700 jobs.

From The Detroit News: http://www.detnews.com/article/20100609/AUTO01/6090323/1148/auto01/Report--GM-to-reinstate-more-dealers#ixzz0qMQ2qm3W

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