NEW GM COMPANY TO RUN DEALERSHIPS.

Byline: Staff and wire reports

General Motors Corp. said Tuesday it has set up an independent subsidiary to own and operate dealerships across the country - a move the head of a national dealers' association vowed to fight.

GM said the company, General Motors Retail Holdings, would buy or partner with dealerships in the largest 130 markets across the country, and could own from 5 percent to 10 percent of GM's 7,700 dealerships in 10 years.

A GM executive said the new arrangement was the best way for GM to get closer to customers.

``It is critical to GM's future competitiveness that we improve our market performance where we lag, enhance our revenues, understand our customers better and look for ways to reduce distribution costs and improve the customer's buying experience,'' said Roy S. Roberts, group vice president of GM North American Vehicle Sales, Service and Marketing.

But the chairman of the National Automobile Dealers Association said the move was ``a huge threat.''

``I think it's terrible,'' said James Willingham, who owns two GM dealerships in California. ``This announcement was made without any consultation of dealers.''

GMRH is the latest in a series of moves by GM and Ford Motor Co. aimed at improving how their vehicles are sold. In recent years the automakers have bought out some dealers and consolidated others, hoping to trim the number of dealerships and increase sales at those remaining.

Last year, General Motors executives began what the company called ``Project 2000,'' a dealer network strategy designed to boost market share. It included the San Fernando Valley Project, an effort to improve the company's poor retail share locally.

In May 1998, GM put one of its most successful retailers, Wes Rydell of North Dakota, in charge of 12 Valley franchises. That move angered local dealers who chose not to participate in the plan and eventually led to a state investigation of the company's business practices.