REPORT: GM to let rejected dealers apply for new franchises

General Motors' bankruptcy lasted all of 42 days, and the General got a lot of liabilities off the book in that short window of opportunity. One of the more controversial moves was to give 1,300 dealers across the US a pink slip post-dated for October 2010, bringing the Detroit, MI-based automaker down to a more manageable 3,600 retail outlets. The move rankled local communities and lawmakers alike, as tens of thousands of jobs will soon disappear. GM says the move will save them bushels full of cash by lowering overlapping marketing efforts and making the remaining dealerships more competitive with the General's lower market share.

While those sound like rational reasons to close dealerships, GM's decision to open several new stores across the US is a bit confusing. GM isn't revealing how many dealerships will be added or which urban and rural areas will receive the Buick, Cadillac, Chevrolet and GMC outlet, but Automotive News is reporting that some of the jettisoned dealerships will be able to apply for new stores. GM spokesman Greg Martin reportedly told AN that GM is looking at, "select points in certain markets around the country as part of our ongoing analysis of our dealer consolidation efforts." The Committee to Restore Dealer Rights, which represents some of the rejected dealers, told the industry pub that at least twelve of the dealers from Michigan, Illinois, Pennsylvania, Ohio, Colorado and Massachusetts received letters inviting them to apply for a new dealership.

The National Automotive Dealers Association no doubt appreciates GM allowing select rejected dealers apply for new franchises, but the dealer mouthpiece feels those retailers should have first dibs for any new stores. Many lawmakers agree, and both politicians and dealer rights groups reportedly feel that GM's terms are inadequate. In September, GM CEO Fritz Henderson reportedly told Michigan lawmakers that the company could restore a limited number of rejected dealers, but new compensation was off the table.

[Source: Automotive News - Sub. Req. | Image: Justin Sullivan/Getty]

Share This Photo X