GM reinstates 661 dealerships

General Motors has agreed to reinstate about one-third of the dealerships that it planned to close during bankruptcy last year, as the automaker struggled to reinvent itself through the 2009 auto crisis.

About 1,100 of the dealerships had sought arbitration to be reinstated. In addition, GM also shut down or shed almost 900 dealerships that only sold brands that the company eliminated: Hummer, Pontiac, Saab, and Saturn.

In a notice dated March 5th, the company said it planned to send Letters of Intent to 661 of the dealers, essentially reinstating them. Trade publication Automotive News says anecdotally by talking to dealers, most of the outlets that were reinstated were rural stores and Cadillac dealerships.

Changes in GM's management have brought in aggressive changes, and the company's new CEO, Ed Whitacre, is reportedly unwilling to wait for sales to improve. Adding back the dealerships may be one way to boost sales.

The parties faced a Jun 14 deadline from Congress to complete arbitration, and dealers who were rejected in that process would go out of business by October, 2010.

National Automobile Dealers' Association Chairman Ed Tonkin called the letters "a significant move forward in advancing the state of dealer relations."

GM and the other Detroit automakers have traditionally had more dealers and fewer sales per dealership than import brands such as Honda and Toyota.

The move will save much-needed jobs, boost local car-sales competition, and provide more convenient access to sales and service. All good things.

—Eric Evarts