900 GM dealers on closing list likely saved

6/9/2010

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

Mark Reuss, president of GM North America, said 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.

More than a dozen GM dealer franchises in northwest Ohio and southeast Michigan were to be canceled. It was not immediately clear whether any of those but one would be given new life.

GM did not release a list of the 900 dealerships.

Bob Kapp, new car manager at Allen Chevrolet Cadillac in Monroe, said the dealership learned in April that it would be reinstated, and it plans to hire 10 to 12 people as business picks up.

"Everyone's pretty excited." he said. "It was tough there for a while."

July is the end of a federally mandated arbitration process under which dealerships that GM and Chrysler had targeted could appeal. Partly because of GM's strategy change, only about a quarter of the 1,576 cases brought by GM and Chrysler Group LLC dealers remain before arbitrators.

Last year GM and Chrysler announced plans to shed nearly 2,800 dealers as part of their bankruptcy reorganizations. GM planned to have 4,100 dealers across the country.

The decision reflects a shift in strategy from GM's previous regime. The company will not estimate how many jobs the decision will save. An auto industry trade group says an average new-car dealership has about 50 employees.

GM wants to avoid the expense and time of the closures. Mr. Reuss and other new leaders contend that shedding dealers is not critical for GM to achieve profitability.

GM had around 6,000 U.S. dealers when it went into bankruptcy protection, and Chrysler had about 3,800.