GM to review some dealership shutdowns

Meeting with legislators focuses on quality rankings, electric cars

David Shepardson and Rob Snell / The Detroit News

Washington -- General Motors Co. CEO Fritz Henderson told Michigan congressional members that the automaker is willing to re-examine decisions to close a limited number of profitable dealers because of poor scores on other criteria.

That could help head off legislation before Congress to reverse or prevent the closing of more than 2,000 GM and Chrysler Group LLC dealerships.

Henderson addressed the dealer closings and other issues, including the progress of GM's Chevy Volt program, during a meeting Wednesday on Capitol Hill with Congressional leaders and a conference call with Michigan lawmakers on Thursday. He addressed the dealer closings after getting questions from Sen. Debbie Stabenow, D-Lansing, and Rep. Pete Hoekstra, R-Holland.

Hoekstra urged GM to be "transparent" in its handling of dealers, he said in an interview. GM is paying its closing dealers $600 million and giving them more than a year to shut down. The automaker has reversed 70 of the closings.

Hoekstra called GM's dealer closings "an inherently poor strategy that makes no sense at all. They have never given us a good rationale." He said dealers can't win without pressure from Congress. "The little guy can't beat a GM that's being propped up by the government."

Hoekstra also said that while Ford Motor Co.'s quality has improved, GM hasn't done enough to address quality concerns.

Consumer Reports magazine this week said Ford's quality was "world class" and that GM had some "bright spots."

"How long have we been complaining about the quality of American cars?" Hoekstra said. "Ford has closed the gap, but if you haven't closed the gap, how do you expect to improve market share?"

GM spokesman Greg Martin said it was "strange" that Hoekstra "would want to perpetuate some of the misguided thinking that resides outside of Michigan."

Consumer Reports and J.D. Powers both note the quality gains of Detroit automakers. And, auto information Web site Edmunds.com anticipates GM will increase market share this year.

Henderson said GM was disappointed with its recent reliability rankings by Consumer Reports and vowed to do better. The company's newest products should do well in future rankings. The magazine needs more sampling size to recommend them.

One new product that has gotten plenty of attention is the Chevy Volt, which Henderson said Friday is on track for production in late November or December 2010, even with the departure of the vehicle's top executive.

Frank Weber, global vehicle line executive and global vehicle chief engineer for the Volt since March 2007, announced Friday that he is taking an unidentified job with GM's Adam Opel GmbH unit in his native Germany. Weber, who was on a three-year assignment that was ending soon, will serve on Opel's executive leadership team. His last day with GM is Dec. 2.

Henderson also said GM, which has been losing market share for decades and now holds 19.7 percent of the U.S. auto market, must regain some ground to succeed in the long run. Job and cost cuts aren't enough to turn the company around, he said.

GM's new chairman, Ed Whitacre, has made increasing market share a priority, but some analysts have questioned the strategy, given that GM is in the process of eliminating four of its eight brands.

dshepardson@detnews.com (202) 662-8735