GM looks to reject sales and service contracts with 38 dealers

By Caroline Salls

Pittsburgh, July 7 - General Motors Corp. requested court approval to reject sales and service dealership agreements with 38 dealers, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the motion, a reduction in the number of GM dealerships was a necessary component of the company's "rationalization effort" and was carried out through a "comprehensive, objective and quantitative evaluation of each dealership."

Specifically, GM said it considered minimum sales thresholds, customer satisfaction indices, working capital needs, profitability, whether a dealership sold competing non-GM brands, dealership location and other market factors.

"A leaner, more profitable dealer network with higher annual vehicle sales per dealership is essential to reducing GM's staggering dealer support costs and a critical component of helping to ensure the viability of New GM," the company said in the motion.

The company said the dealer agreements being rejected only affect the 38 dealers that did not choose to participate in GM's participation or wind-down agreements.

The affected dealerships are located in Nebraska, Oregon, South Carolina, Texas, New York, Connecticut, Mississippi, Illinois, Montana, Washington, California, Tennessee, Alabama, Michigan, Kentucky, Georgia, Kansas, Indiana, Wisconsin, Oklahoma, Arizona, Pennsylvania, West Virginia and Delaware.

A hearing is scheduled for Aug. 3.

GM, a Detroit-based automaker, filed for bankruptcy on June 1. Its Chapter 11 case number is 09-50026.

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