GM Stops the Axe Falling on 661 U.S. Dealerships

General Motors Co. announced it plans to reinstate 661 of the 1,160 U.S. dealerships that had their franchises terminated as a result of the automaker’s restructuring.

The dealership franchise terminations were part of the company’s nine-month plan to reduce its showroom network up to 40%. The dealerships had applied for reinstatement through the legally-mandated arbitration process.

The company plans to begin sending letters-of-intent starting on Wednesday, March 10 to the dealers.

“By doing this, we save a lot of time and energy and dollars,” said Jim Bunnell, General Motor’s manager of dealer networks during a conference call.

The company added it would have been impossible for GM to effectively arbitrate the 1,100 cases in the stated 120 days needed for it to be completed. Before the company reorganized last spring as a result of its bankruptcy, GM had announced it would shrink its 6,150 U.S. dealerships to 3,600 by the end of 2010.

In Canada, nearly 300 dealers had their franchises terminated as a result of a similar plan. There is no word that any Canadian dealerships would have their franchises reinstated.