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GM runs ads against reimbursing axed Colo. dealers

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CATHERINE TSAI | February 18, 2010 05:35 PM EST | AP

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DENVER — General Motors Co. is launching a $60,000 radio and print ad campaign against a bill aimed at reimbursing Colorado dealerships terminated by GM and Chrysler Group LLC.

The bill would require carmakers to reimburse the dealers for upgrades they were required to make in the past five years. Some upgrades cost millions of dollars. The dealers also would get a right of first refusal if the manufacturers later award another franchise nearby.

GM also is keeping tabs on legislation in Virginia, Ohio and Massachusetts tied to plans to end franchise agreements. So far, ads are only planned in Colorado and Massachusetts.

GM said the Colorado bill bypasses an arbitration process approved by Congress and will tie its hands as it works to become profitable and repay billions of dollars in government loans as planned in June.

"This legislation threatens our ability to essentially run our business at the retail level," GM spokesman Greg Martin said.

As part of its massive restructuring, GM told about 2,000 dealers nationwide last year that it planned to revoke their franchise agreements this October. Chrysler ended franchise agreements with 789 dealers last summer.

Congress passed a bill allowing dealers to appeal to arbitrators. GM has already reinstated about 100 dealers through its own appeals process.

The Colorado House has passed the state bill involving dealerships, and the Senate is considering it.

The ads to begin Friday in Colorado say the bill's requirement for reimbursement of upgrades doesn't account for depreciation, and the clause on right of first refusal would apply even to poorly performing dealerships.

Fourth-generation dealership owner Elizabeth Daniels, who sells Chevrolets in Colorado Springs, said the ads wouldn't be well-received.

"If GM took money from taxpayers, they better be spending it wisely to do their housekeeping and get their ducks in a row and not worry about the likes of Colorado dealers wanting a fair deal," she said. "This is money poorly spent."

Colorado Automobile Dealers Association President Tim Jackson said 25 GM dealers in Colorado are slated to be cut off. Daniels is among dealers who are appealing.

GM's restructuring, approved by a federal bankruptcy court, required sacrifices across the board, not just dealers, Martin said. GM cut vehicle brands and models, jobs, benefits, salaries and closed several plants.

Chrysler referred questions to the Alliance of Automobile Manufacturers. Spokeswoman Gloria Bergquist said the group opposes the bill but is working with legislators on an approach that meets the needs of dealers and manufacturers.