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GM to end year with 4,500 U.S. dealers

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GM to end year with 4,500 U.S. dealers

Robert Snell / The Detroit News

General Motors Co. will wind up with about 4,500 dealers in the U.S. later this summer following arbitration hearings mandated by Congress -- about 500 fewer than previously disclosed.

Before bankruptcy, GM had 6,150 dealerships. Once the restructuring is completed this summer, the automaker will have about 4,500, GM North American President Mark Reuss said today.

He made the disclosure during a business meeting with bankers and financial analysts at the company's Warren Technical Center. The group gathered to hear a briefing on the automaker's financial plans ahead of a public stock offering expected late this year.

"We are strategically aligning these franchise points so we don't have overlap," Reuss said.

When GM filed bankruptcy last year, it terminated franchise agreements with about 2,000 dealers, arguing that a smaller network would save money and boost the average number of sales, and profits, at remaining locations.

The move 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 offered to reinstate 666 of them. About 600 dealers accepted GM's terms and are being reinstated. The remaining dealers are continuing toward arbitration.

Reuss recently told the Associated Press that GM would have about 5,000 dealerships once the arbitration process concludes next month, but the automaker has cautioned the number changes every day as cases are concluded.

The lower 4,500 figure does not necessarily mean GM is winning arbitration cases, spokeswoman Ryndee Carney said today.

In March, GM said the dealership network size would be between 4,100 and 5,300, so the figure mentioned by Reuss today falls within that range, Carney said.

Reuss and other GM executives today are detailing the revamped automaker's business, industry trends and plans -- especially in foreign markets.

The meeting is a bid by GM to convince investors the company will be a sound investment and that the company will generate sufficient cash to fund new vehicle investments. And executives are drawing a clear distinction between the GM of today and the prior company that filed for bankruptcy protection last summer.

"We're not reintroducing GM today. We're introducing a new GM, because we are a new and much different company than we were 12 months ago," Chairman and Chief Executive Ed Whitacre said this morning.

About 200 people, most from the financial community, are expected to attend today's meeting.

In his early comments, Whitacre touched on GM's financial progress this year.

GM posted a first-quarter profit of $865 million and has said it will invest $3 billion this year in its plants. The company has repaid $6.7 billion in outstanding U.S. government loans and $1.4 billion to Canada.

An initial public stock offering, expected later this year, will allow GM to again be a publicly traded company, the first step toward the federal government selling its ownership stake in the car company.

The Treasury swapped $43 billion of its $50 billion bailout for 60.8 percent of GM, and holds $2.1 billion in preferred shares.

Reuss told attendees later that the automaker's home market has increased average transaction prices, lowered the break-even point, slashed labor costs and boosted capacity utilization at its plants.

GM forecasts a 45 percent growth in U.S. sales by 2014 with sales on an annualized basis to rise from 12 million to 17.5 million in 2014.

GM stock could be offered as early as October, and raise $20 billion as the U.S. Treasury Department divests 20 percent, or more, of its 61 percent stake. The company still is working on its stock registration.

The meeting is serving as a primer, of sorts, of GM's global operations and will include details on the restructuring of its struggling Europe unit with an eye toward breaking even in 2011.

Charts posted on GM's website this morning show the automaker expects 45 percent of the auto industry's growth through 2014 will come from Brazil, Russia, India and China.

GM shared its three-prong product strategy, which focuses on global vehicle architectures, regional solutions and collaborations with partners worldwide.

GM will launch 70 new vehicles internationally between now and 2014 as the automaker feeds demand in emerging markets.

In Europe, its Opel/Vauxhaull unit will unveil 14 new vehicles by 2014 while Chevrolet will build 13.

Check back with www.detnews.com for updates throughout the day.

From The Detroit News: http://detnews.com/article/20100629/AUTO01/6290400/1148/auto01/GM-to-end-year-with-4-500-U.S.-dealers#ixzz0sHTe8Qmw

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