GM to reinstate 600 dealerships slated to close

By Dana Hedgpeth
Washington Post Staff Writer
Saturday, March 6, 2010

General Motors said Friday that it will reinstate more than half the 1,100 dealerships it had planned to close, after a vigorous campaign waged by dealers against the closings.

The move comes nearly a year after the Detroit automaker said it needed to shut down as many as 2,000 dealers by October 2010 as part of a broad restructuring. In announcing an initial round of closings, GM said the move would save it about $2.5 billion annually.

Most of the dealers who were told to close filed arbitration claims against GM, and many asked their representatives on Capitol Hill to intervene. In late December, Congress passed a law that appointed the American Arbitration Association to handle the claims.

General Motors said it is sending letters to about 600 dealerships with instructions on qualifying for reinstatement. The dealers, GM officials said, will have to meet certain criteria to stay open, including having adequate financing and operating capital, as well as positive customer satisfaction reviews.

"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," Mark Reuss, president of GM North America, said in a statement. "The arbitration process creates uncertainty in the market."

He called the offers to reinstate some dealers "good for our customers, our dealers and GM."

Chrysler had targeted 789 dealerships for closing as part of its reorganization in bankruptcy protection. Chrysler officials said Friday that because its dealerships were not included as part of the newly reorganized company, those dealers' contracts with the automaker were rejected. About 400 of those Chrysler dealers have filed arbitration claims, and Chrysler said it expects the arbitration hearings to start at the end of March or early April.

The reinstatement came as relief to some dealers.

"I'm very pleased because the dealers have had their property taken from them improperly and now they're getting it back," said Jack Fitzgerald, a major car dealer in the D.C. area. "GM is doing the right thing."

Fitzgerald had three dealerships that GM had scheduled for closing. He said Friday afternoon that he didn't know whether any of those dealerships was a candidate for reinstatement.

Even with the reinstatement, some dealers who helped fight to keep dealerships open were skeptical.

"If it is sincere, then we welcome it with open hands and we really appreciate it," said Tammy Darvish of the Darcars Auto Group, which is one of the Washington area's largest auto dealers. Darvish said she worried that GM would use criteria to reinstate dealers that some wouldn't be able to meet.

"I just don't think that these dealers can take another false hope or another big letdown, both emotionally and financially," she said. "It's been such an emotional roller coaster."

© 2010 The Washington Post Company