The FINANCIAL -- General Motors on March 5 announced that it will reinstate 661 dealerships it sought to close.

GM sought to shut down about 2,000 dealers - or about a quarter of its network - in order to increase profitability in the wake of a decades-long decline in market share, AFP reports. Some 1,100 of those dealers protested and sought relief through an arbitration process and federal lawmakers threatened to take pass legislation to protect the franchises and the 113,000 jobs which could be lost.

"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," said Mark Reuss, president of GM North America, according to the same source. "This has been a very, very tough time as the company has emerged from bankruptcy," Reuss added. "It is emotional, and it is part of the rebirth as we start the company from a clean slate."

The cuts to GM's 6,000-dealer network were designed to compensate for much lower demand for cars and trucks, but some dealers have argued that lots that are still profitable are at risk, and that the automaker hasn't offered enough details about how it's choosing which businesses to shutter, AP reports. GM would not offer any details on Friday about which dealerships it was reinstating and where they are located. It said it chose the 661 based on a variety of criteria, including sales and other business factors.

The company said it hoped to have every letter of intent with dealerships by Monday. At that point, dealers have 10 days to respond and 60 days to meet a set of criteria that would allow them to stay with GM, according to the same source. A spokeswoman with Chrysler Group LLC, which has cut 789 dealers, said the company was preparing a statement in response to questions about whether they also intended to reinstate dropped dealerships. Chrysler showrooms slated for closure are also appealing to stay open, though it remained unclear how many.

GM had aimed to cut about 40% of its 6,246 stores. Some of those closings represent brands that GM is phasing out or selling—Hummer, Saab, Saturn and Pontiac, The Wall Street Journal reports. GM now expects to end up with about 5,000 stores for its remaining Chevrolet, Cadillac, Buick and GMC brands.

GM originally agreed to set up an appeals process to avoid long and costly legal battles with dealers that felt they were wrongly selected for elimination. But the move now has added significance now that Chairman and Chief Executive Edward E. Whitacre Jr. has made boosting sales in the U.S. a top priority, according to the same source. Reinstating dealers and taking orders to restock their lots could help GM improve its market share as Whitacre desires, and help the company regain the lead in U.S. vehicle sales.

The reinstatement came as relief to some dealers, The Washington Post wrote.  "I'm very pleased because the dealers have had their property taken from them improperly and now they're getting it back," said Jack Fitzgerald, a major car dealer in the D.C. area. "GM is doing the right thing."

Fitzgerald had three dealerships that GM had scheduled for closing. He said Friday afternoon that he didn't know whether any of those dealerships was a candidate for reinstatement, according to the same source. Even with the reinstatement, some dealers who helped fight to keep dealerships open were skeptical.  "If it is sincere, then we welcome it with open hands and we really appreciate it," said Tammy Darvish of the Darcars Auto Group, which is one of the Washington area's largest auto dealers. Darvish said she worried that GM would use criteria to reinstate dealers that some wouldn't be able to meet.

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