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March 8, 2010

US: GM reinstates 611 dealers

General Motors' long-running saga concerning its US dealer network has taken a step towards resolution, with more than half of 1,100 outlets sacked post-bankruptcy being reinstated.

General Motors’ long-running saga concerning its US dealer network has taken a step towards resolution, with more than half of 1,100 outlets sacked post-bankruptcy being reinstated.

The US automaker had received backing last year from the bankruptcy courts to cut the dealers as it attempted to axe costs and improve its lacklustre retail network, although hundreds of outlets had fought the proposal.

The dealers maintained their franchise rights had been violated and had appealed to legislative authorities, resulting in Congress passing a law to create an arbitration scheme.

GM now says those claims – filed with the American Arbitration Association and consisting of 1,100 petitions – have resulted in 661 dealers being reinstated.

The dealers will receive a letter of intent, which, according to GM, “contains our usual core business criteria”.

“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 GM North America president Mark Reuss.

“The arbitration process creates uncertainty in the market. We believe issuing these [letters] is good for our customers, our dealers and GM.”

The National Automobile Dealers Association (NADA) broadly welcomed the decision, although it expressed concern about the remaining wind-down operations.

“The announcement by General Motors of its intent to reinstate 661 dealers is a significant move forward in advancing the state of dealer relations, said NADA chairman Ed Tonkin. “We’re eager to work with Mark Reuss and his team as they focus on restoring stronger ties with their dealers.

“We appreciate the good faith effort that GM is showing and hope that this carries forward in its continuing settlement and arbitration discussions with the remaining wind-down dealers.”

A similar arbitration process is also proceeding for Chrysler.

NADA represents nearly 17,000 new car and truck dealers with approximately 37,500 franchises, both domestic and import.

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