The 20 members of General Motors' national dealer council are putting their money where their mouths are. They purchased more than $1 million worth of GM stock this week.

The dealers say the move is a symbolic gesture to show support and confidence in GM's future.

GM has been beset by a deep decline in North American sales and a sharp hit to its stock price, which has plunged to historic lows below $9 a share. But GM's dealer council members say they believe the stock is undervalued and the company is underestimated.

"We took a hard look at General Motors and we wanted to show our confidence in General Motors," says Duane Paddock, co-chair of GM's national dealer council and owner of Paddock Chevrolet in Kenmore, N.Y. "We firmly believe in GM and that we have the best products to sell, our fuel economy is the best story in the industry and the best way to do it was to buy an investment stock."

Paddock says he called an early dealer conference call on Friday, July 11, to bring up the idea of buying a big chunk of GM stock.

'Good investment'

"There wasn't one person on that call that didn't agree it was a great idea to show GM the confidence we have in them and that it was a great opportunity to bolster our position with GM stock," Paddock says.

Paddock called GM's sales chief, Mark LaNeve, that day and told him what the council was thinking.

"I said, 'I think that's great,' " said LaNeve, GM's vice president of vehicle sales, service and marketing in an interview with Automotive News. "This is a symbolic show of support."

Paddock says it's also a good investment. He had a $200,000 position in GM stock previously and added $100,000 to it this week. The group bought more than 107,000 shares for a total of $1,057,000, he said. Most of the transactions were completed by the end of Monday, July 14, according to a source familiar with the transactions.

Stock rising

They timed the market well. GM stock rose 16.6 percent on Wednesday, July 16, closing at $11.48. And today GM stock surged by another 11.9 percent, closing the day at $12.85 a share.

The council is sending a letter to dealers today explaining what they did and why, Paddock says. "We want them to know the confidence their dealer council -- as a group -- has in GM and to let them know that it's a great investment for other dealers."

The council also is considering buying advertisements in mainstream media to send their message of confidence to consumers. LaNeve said that would be beneficial.

"Customers, media and analysts will say, 'Hey, these guys are at street level and they have confidence' and that's a good thing," LaNeve said. "I'm not so worried about boosting morale; I'm interested in confidence. The main issue you fight right now is consumer confidence."

LETTER TO GM DEALERS

Fellow GM Dealers:

It's no secret to you that this is a very challenging time in the automotive industry. Record gas prices, a shaky economy and slumping consumer confidence have all served to reduce sales and profit opportunity for dealers and manufacturers. We have been through difficult times before and although much of this transition may be structural, there is no doubt that the economy and our industry will improve.

In the meantime, we have the best products to sell that we have ever had in terms of quality, design, value and fuel economy. We continue to be the market leader, and believe GM is responding quickly and appropriately to changing consumer preferences and desire for more fuel efficient vehicles.

Your National Dealer Council has been focused on working with Mark LaNeve and other GM leaders on overall profitability with special emphasis on the new LMA process, SFE and other critical areas. GM has made several positive enhancements in these areas with more to come. We can tell you that GM leadership is keenly interested in our views and our profitability. They listen and they respond.

Since 2005 GM has made sweeping changes to reduce their cost and transform the company. Recently VSSM has assigned Channel Vice Presidents whose only job is to build the profitability of each brand. Earlier this week, GM Chairman and CEO, Rick Wagoner, announced another round of actions to further improve GM's cost and competitiveness.

The National Dealer Council feels it is important to show confidence in the products we sell, our franchises and GM. Also, we think it's important that our customers, the media and analysts know how confident we are in our collective future.

So we have decided to put our money where our mouth is in a big way. Over the past few days NDC members have purchased over 107,000 shares of GM stock through a single broker. This is just among the 21 NDC members and is in addition to stock we may already own.

We strongly encourage all GM dealers to purchase additional shares. We have secured the use of a broker that we are assigning to all GM dealers for just this purpose. The brokerage firm, Smith Barney, has also given GM dealers a discounted commission for this special stock purchase program. The contact information on this special broker is provided below for your reference. (You will receive a follow-up email from Ed's team, distributed by us, with detailed information regarding the account opening and share purchase process.)

Smith Barney

Topeka Group

Ed Agresta – Senior VP Wealth Management

212-893-6422

Along with this stock purchase program, we would like to gather information on how much GM stock you own. We are setting up a secure and confidential website through your GM Co-op program to help us identify how much combined GM stock all GM dealers own. We would ask that you take the time to access this site and let us know how many shares you currently own, and how many you are purchasing through this GM dealer purchase program. Please note that this site will be active on Friday, July 18, 2008.

To access the secured NDC GM Shareholder survey site, simply log into the GM LAM website using your Dealer Principle user ID and Password. Once you are logged in, you will be directed to the survey. You can either elect to complete the survey or choose to complete it at a later time by closing the window. Once the survey has been completed, you will be directed back to the LAM Website homepage. If you do not recall your Dealer Principle ID and Password for this site, please contact program headquarters at 1-888-gmcoop-1.

Our intent is to go way over a couple million shares and to let customers, media and Wall Street know how confident we are in our products and company. We appreciate your support.

Thank you.

Your GM National Dealer Council

Duane Paddock – Co-Chair, National Dealer Council

Paddock Chevrolet, Inc

Kenmore, NY

Leo Bunnin

Bunnin Buick Pontiac GMC Cadillac

Oxnard, CA Jason Brickl

Ballweg Chevrolet, Inc

Middleton, WI

Tom Durant

Classic Chevrolet

Grapevine, TX William Bridges

Capital Cadillac

Smyrna, GA

Mike Mullaney

Hudson Buick, Pontiac- GMC Trk

Poughkeepsie, NY Greg Heinrich

Fairway Chevrolet

Las Vegas, NV

Mike Bowsher

Carl Black Buick Pontiac GMC

Kennesaw, GA Daniel Jobe II

Capitol Cadillac Company

Greenbelt, MD

Tom Zimbrick

Saturn of Madison

Madison, WI Tom Sheehan

Sheehan SAAB

Lighthouse PT, FL

Robert Droubay

Droubay Chevrolet, Pontiac-Buick

Delta, UT Manuel Gonzalez

Sterling Auto Group

Bryan, TX

Randy Marion

Randy Marion Chevrolet

Mooresville, NC Frank McElwain

McElwain Motor Car Co

Elwood City, PA

Bill Delord

Bill Delord Auto Center, Inc

Lebanon, OH Tommy Brasher

Brasher Motor Co. of Weimar

Weimar, TX

Martin Nesmith

Nesmith Chevy Buick, Pontiac, GMC

Claxton, GA Lynn Kimmel

Lockhart Auto Group

Indianapolis, IN

Mike Martin

Dudley Martin Chevrolet

Manassas, VA Howard Drake

Casa Automotive Group

Sherman Oaks, CA