General Motors Co. revealed its intentions to reinstate 661 of the 1,160 rejected dealerships that applied for arbitration to restore their franchises. This effectively scraps a nine-month plan to lower its showroom network by 40%.
According to GM executives, the company is starting settlement procedures early so as to avoid the stresses of congressionally mandated arbitration.
On March 10, the letters of intent will start going out. The GM executives say that the length of the process could range from a few weeks to several months.
GM anticipates for this effort to be completed by mid-summer. At a conference call, Jim Bunnell, GM's general manager of dealer network support, said that this decision saves time, energy, and money.
Susan Docherty, GM's U.S. marketing chief, shared that the company had concluded that it would not be possible to arbitrate 1,100 cases in a 120-day period.
Last December, President Barack Obama had signed in a law that requires that arbitration be completed by mid-June. Arbitrators can opt for a one-month extension.
Before GM's bankruptcy reorganization last spring, there were plans to reduce its 6,150-dealership network to 3,600 by the end of this year. GM's reinstatement decision means that GM would be left with 4,500 to 5,000 U.S. dealerships. [via autonews]