General Motors Co. and Chrysler will reconsider decisions to close thousands of dealerships as part of a compromise meant to stave off federal legislation that would require them to keep the showrooms open.
The decision by the two automakers, announced Thursday, raises the prospect of new life for some of the more than 3,000 dealerships that were slated to close as part of the broad auto industry restructuring.
Dealers have loudly protested the decisions, and some said the policy is merely an attempt by the automakers to placate Congress.
Just how many dealers could potentially be allowed to stay open remains unclear. The companies did not provide any estimates. Dealers involved in talks this fall with the automakers said likely only a handful of lots targeted for closure would survive, despite the new policy.
The plans of GM, based in Detroit, and Chrysler Group call for face-to-face reviews with dealerships and binding arbitration for those who challenge closure of their showrooms.
Chrysler said its review process started Thursday while GM said talks with dealers would begin in mid-January.
Chrysler, based in Auburn Hills, Mich., said dealers will be given a chance to open new showrooms if an arbitration panel rules in their favor.
Dealer groups and a key lawmaker questioned the automakers' latest plans, however, opening the possibility of Congress considering the dealer legislation anyway. The National Automobile Dealers Association said the GM proposal was a "positive step" but did not create "a sufficiently meaningful process that provides for a reasonable opportunity for dealer reinstatement."
Rep. Christopher Van Hollen, D-Md., who has criticized the dealer cuts, said the GM and Chrysler plans "still fall short of what is needed to help reinstate profitable car dealers and put their employees back to work."
GM, the largest U.S. automaker, said it would be more transparent about how it picked the dealers that will be closed. It will speed up payments to assist closed dealers, whose staff will need job retraining.
As part of its deep restructuring this year, GM has said it will cut 2,400 dealers from its 6,000-dealer network by next fall. Chrysler announced similar plans, slashing 789 dealers as part of its restructuring this summer. Both automakers say the cuts are needed to better align their dealer network with much lower demand for cars and trucks.
But dealers have accused the automakers of closing lots that were still profitable, and said the auto companies weren't forthcoming about the criteria they used to decide who will close and who stay open.
The House passed legislation in July that would force the companies to reverse their closure plans, though the Senate has not taken it up. The Obama administration opposes the measure. The federal government holds a majority stake in GM and 10 percent in Chrysler.