More than 95 percent of eligible dealers at bankrupt General Motors Corp have signed on or verbally agreed to participate in the new company, Chief Executive Fritz Henderson said on Friday.
Henderson also told a House of Representatives subcommittee that almost 90 percent of dealerships slated for termination have signed or verbally agreed to wind-down terms.
GM had given dealers until Friday to decide whether they would continue selling vehicles for the company under new terms aimed at streamlining the distribution and sales network and increasing market share.
Our dealership consolidation is not just about saving money, but about creating opportunity and revenue growth, Henderson said, adding that the company received 856 appeals from dealerships facing termination and reversed closure decisions for 35.
Chrysler Group LLC President Jim Press told the panel that Chrysler has sold or redistributed 99 percent of inventory from the 789 dealerships it is closing as part of its bankruptcy restructuring.
The company plans to operate about 2,300 dealers under its alliance with Italy's Fiat SpA, which closed earlier this week.
House and Senate members have introduced legislation to force changes in how GM and Chrysler restructure their sales networks, stressing softer landings for those businesses scheduled for closure.
Lawmakers have also asked the Obama administration to intervene. An administration task force is pushing restructurings at both companies.
Representative Bart Stupak, chairman of the Energy and Commerce subcommittee on oversight and investigations, said he wants GM and Chrysler to become viable but questioned the dealership strategy.
I am concerned that the accelerated timeframe for dealership closures and the way in which dealers have been treated may actually damage the brands more than help them, said Stupak of Michigan, where GM and Chrysler are based.
GM plans to close 1,280 U.S. dealerships through October 2010, leaving the company with between 3,500 and 3,800 showrooms and a retail market share of about 17 percent, assuming annual industry sales of 10 million units.
Even with these cutbacks, GM will still have the largest dealer network in the country, Henderson said, including rural areas -- a major concern of lawmakers on Friday and at a similar hearing last week in the Senate.
By comparison, Ford Motor Co operates 3,300 dealerships, and global sales leader Toyota Motor Corp of Japan has 1,200 in the U.S.
Chrysler and GM -- and the government's autos task force -- have been criticized by some dealerships and dozens of lawmakers for their aggressive restructuring strategy that includes shrinking the dealer networks.
In 24 hours I was told that everything my family and I had worked for 84 years would be taken away, said Frank Blankenbeckler of Carlisle Chevrolet Co in Waxahachie, Texas, holding back tears as he pressed for answers.
Press and Henderson have said the decisions were very difficult, but many businesses targeted for closure have low overall volume, weak sales or inconvenient locations. Analysts and other industry insiders widely agree that paring U.S. auto dealer networks is essential.
We've got 2,300 dealerships with a lot of employees whose jobs and businesses are saved, Press said. We have taken every step to make this a soft landing for dealers.
(Reporting by Mari Saito and John Crawley; Editing by Gerald E. McCormick and John Wallace)