UPDATE 1-GM dealers urge "proper" treatment in consolidation

* Dealers say GM should treat them 'fairly, equitably'

* Dealer group: consolidation to cost GM $35 bln in rev

By Soyoung Kim

DETROIT, April 28 (Reuters) - U.S. dealer representatives urged General Motors Corp GM.N on Tuesday to offer "proper compensation" in its plan to eliminate more than 40 percent of its U.S. dealers in less than two years.

The struggling automaker said on Monday it would reduce its 6,246 U.S. dealerships by 42 percent by the end of 2010, as part of a sweeping restructuring process the U.S. government has said the company must undergo to continue to receive taxpayer-funded support.

The National Automobile Dealers Association, which represents about 20,000 new car dealers in the United States, said GM had provided limited information on the consolidation plan, adding another layer of uncertainty to dealers already struggling to survive frozen credit and a collapse in sales.

"It is imperative that GM treat all of the dealers fairly and equitably and that they be properly compensated," said NADA Chairman John McEleney said in a statement.

"After all, it's not out of any fault of their own that these dealers are being forced to close their businesses," he said.

GM spent more than $1 billion when it closed its Oldsmobile division and shut some 2,800 dealerships. But with the company teetering on the brink of bankruptcy and kept afloat with $15.4 billion of emergency government loans, analysts expect that kind of payout is unlikely this time.