General Motors on Friday offered to reinstate 661 US dealerships slated for closure under its massive restructuring plan, amid legal challenges from the dealers and pressure from lawmakers.
GM sought to shut down about 2,000 dealers – or about a quarter of its network – in order to increase profitability in the wake of a decades-long decline in market share.
Some 1,100 of those dealers protested and sought relief through an arbitration process and federal lawmakers threatened to pass legislation to protect the franchises and the 113,000 jobs which could be lost.
“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 Mark Reuss, president of GM North America.
“This has been a very, very tough time as the company has emerged from bankruptcy,” Reuss added. “It is emotional, and it is part of the rebirth as we start the company from a clean slate.”
The dealers will have to meet a number of requirements, such as adequate capital and a good location, in order to qualify for reinstatement of their franchise rights.
The National Automobile Dealers Association hailed the decision as a “significant move forward in advancing the state of dealer relations.”
“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,” chairman Ed Tonkin said in a statement.