GM Dealers in Limbo

Over 600 General Motors dealerships scheduled to lose their business with the beleaguered automaker are getting a second lease on life, however, some are not so sure that they want it.

The company announced amid its bankruptcy filing last year that it would be cutting ties with nearly 2,000 dealerships. Refusing to go quietly into the night, those dealership owners, many of whom felt that they were being haphazardly punished because of GM’s mistakes, fought back and won reprieve from Congress.

Lawmakers ordered the automaking giant to enter into arbitration with dealerships that did not want to be forced out of business. Nearly 1,200 dealerships signed up for the process.

Last week, the company announced that, instead of entering into thousands of costly arbitrations, it would provide 661 of those dealers with the opportunity to get their franchises reinstated.

"We are eager to restore relationships with our dealers and get back to doing what we do best -- selling cars and taking care of customers," Mark Reuss, president of GM North America, said in a prepared statement. "The arbitration process creates uncertainty in the market. We believe issuing these letters of intent is good for our customers, our dealers and GM."

The company has said that it would send out reinstatement requirements to dealerships by Friday. Once the terms are agreed to, the dealership will have 60 days to meet them.

Many, however, fear that the terms and conditions will be overly burdensome, making it nearly impossible to conduct business.

"Initially, we were excited," said Howard Braunstein, CEO of M&M Auto Group in Liberty, N.Y., according to . "However, I am concerned that GM's offer for reinstatement will mandate requirements that will be difficult or impossible for many dealers to meet, especially in the 60-day time frame we were given."

But, even with the tough requirements, those that filed for arbitration are in a better position than those who choose not to go that route. The vast majority of dealerships GM has chosen to reinstate were, coincidentally (or not), planning to enter into arbitration.

Still the national association representing the nation’s 17,000 auto dealers said that it was grateful to GM for providing at least some of its dealerships with the opportunities to continue their businesses.

"We're eager to work with Mark Reuss and his team as they focus on restoring stronger ties with their dealers," Ed Tonkin, chairman of the National Automobile Dealers Association, said in a statement. "We appreciate the good faith effort that GM is showing and hope that this carries forward in its continuing settlement and arbitration discussions with the remaining wind-down dealers."