GM cuts down on dealership closures
DETROIT — General Motors will keep open about 900 dealerships across the country that it had planned to close, a shift in corporate strategy that could preserve thousands of jobs.
The automaker will wind up with about 5,000 U.S. dealers in July, up from original plans for 4,100, Mark Reuss, GM's North America president, said. It had about 6,000 when it filed for bankruptcy last year.
The change represents a desire by GM's new leadership team to avoid the expense of closing dealerships, a step they say is not critical to bring the company back to profits.
GM's large dealer network "used to be one of our main, massive strengths," Reuss said during a recent test drive of the new Chevrolet Cruze. "I still think that's true. It can be true with the right dealers."
July is the end of a federally mandated arbitration process under which dealerships GM and Chrysler had targeted could appeal. Partly because of GM's strategy change, only about a quarter of the 1,576 cases brought by GM and Chrysler dealers remain before arbitrators.
"Everyone's pretty excited," said Bob Kapp, new car manager at Allen Chevrolet Cadillac in Monroe, Mich., which learned in April it would be reinstated as a GM dealer and plans to hire 10 to 12 people as business picks up. "It was tough there for a while."
GM on Tuesday would not estimate how many total jobs might be saved. The National Automobile Dealers Association, a trade group, said about 50 people work at an average new-car dealership.
Both GM and Chrysler announced plans to shed 2,800 dealerships as part of their reorganizations. The companies said their U.S. sales didn't justify so many dealers — nearly 10,000 between them. By comparison, Toyota has only about 1,200 even though it's the second-largest automaker by U.S. sales.
GM and Chrysler also argued closing some dealers would make the remaining ones more profitable and allow them to invest in nicer facilities, advertising and training.
