General Motors Co. will reinstate more than half the dealerships it targeted to drop from its network.

GM executives said Friday that about 600 dealerships out of the 1,100 seeking to stay with GM will receive letters giving them the option to remain with the automaker.

During its restructuring last year, GM told 2,000 dealerships it would revoke their franchises by October 2010. (Paul Sancya/Associated Press)

In Canada, GM had said it intends to eliminate more than one-third of its Canadian dealerships by October 2010 in an attempt to cut costs and streamline its business. It was not immediately known if those plans would change after the U.S. announcement Friday.

The company had more than 700 dealerships in Canada before the closures that were estimated to employ 33,000 people.

GM last year told 2,000 U.S. dealerships it would revoke their franchise agreements in October 2010 as part of its restructuring.

The company has said it needs to shrink the number of showrooms to keep the remaining ones healthy.

The dealers, who say they have been treated unfairly, have been appealing the decision.

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.

Compromise to avoid legislation

GM and Chrysler, which has slashed 789 dealers, have said they would reconsider the cuts. The decision was a compromise meant to avoid federal legislation that would require that the showrooms be kept open.

Under the revised plans, dealerships would get face-to-face reviews, binding arbitration and faster payments to help dealers slated for shutdown.

Congress-brokered talks between dealer groups and the automakers began in September. But those talks stalled over disputes about the review process for targeted dealerships and other issues.

Looming over the fight has been the threat of federal legislation to deal with the closures. Lawmakers warned that if a deal wasn't reached, that legislation would move forward.

The White House has opposed the legislation over concerns that it could hurt GM's and Chrysler's efforts to rebound from their government-led bankruptcies.