GM Reconsidering Dealership closings.

General Motors Co. and Chrysler Group LLC are offering to spare some of the more than 2,000 dealerships slated for closure in the automakers' drastic cost-cutting plans.

GM and Chrysler said Thursday they may reinstate some dealerships if Congress agrees to drop proposed legislation to reverse the planned closures.

Both automakers took advantage of the Chapter 11 bankruptcy process this year to cull their dealer networks and retain fewer but more profitable stores.

In GM's case, the dealer cutbacks also reflected its decision to close or sell the Hummer, Saturn, Pontiac and Saab brands.

But hundreds of dealers protested to their representatives in Congress — the same people who in many cases had blasted the automakers for running bloated operations.

GM's proposal — one of the first initiatives announced since Chairman and CEO Edward Whitacre Jr. took over the management on Tuesday — is part of a broader plan to resolve complaints raised by dealers. Both GM and Chrysler have shrunk most operations, cutting jobs and reducing wages for executives and benefits for salaried employees, union workers and retirees.

Chrysler agreed to establish a binding appeals process for the 789 dealers it shuttered in June, giving them a chance to reopen.

The move is a reversal for Chrysler, which for months insisted it would not hear appeals.

By contrast, GM heard hundreds of appeals, reversed itself in about 70 cases and provided $600 million to help dealers wind down their operations.

GM is offering to provide Chevrolet, Buick, GMC and Cadillac dealers slated for closure face-to-face meetings to review specific reasons their franchise agreements were not being renewed, and binding arbitration if a dealer remains unsatisfied.

The arbitration process would focus on whether GM used business criteria in deciding which dealerships would close.

"GM values its dealer body and recognizes the contributions they are making to the future viability of the company, the critical role they play in satisfying customers and their importance to communities across the country," said Susan Docherty, GM's head of U.S. sales.

GM said it would start implementing its proposal in January if Congress dropped the legislation.

The National Automobile Dealers Association said it appreciated "the good faith and constructive dialogue" with GM and Chrysler, but said GM's plan does not include a "sufficiently meaningful process" that could lead to a "reasonable opportunity" for a dealer to be reinstated.

"We will also continue to work with Congress on the pending 'dealer rights' legislation in the event a non-legislative solution cannot be achieved on this important issue which affects thousands of people's jobs and lives and their communities," NADA said in a statement.

Congressional leaders said the proposals didn't go far enough." It is positive that GM and Chrysler are offering a chance for rejected dealers to meet and appeal their company's decision," said Katie Grant, a spokeswoman for House Majority Leader Steny Hoyer, D-Md. But "arbitration must allow for consideration of all information that dealers and the company want to present and not be limited to a narrow set of criteria that predetermines the outcome."

Chrysler said in a statement that if the independent three-person panel reviewing appeals found in the dealer's favor, the dealer would be allowed to reopen, either in their previous market area, or in an available area.

The Auburn Hills automaker also agreed to face-to-face meetings with dealers whose operations were closed.

In addition, Chrysler said it would repurchase eligible parts inventory at 68 cents on the dollar –the average transaction price for parts sold among dealers between June 9 and Sept. 10. It will send letters to the dealers by Dec. 10.

Chrysler also said that while it has not "closed the door to further discussion" with dealers, the process outlined Thursday "fully addresses concerns that Congress and the discontinued dealers have raised: it provides transparency, a right of appeal, and opportunities to join the new dealer network." Detroit News

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