Latest News

Congress Takes Automakers To Task Over Dealer Cuts

May 29, 2009

Spurred on by an onslaught of adverse publicity and a powerful grassroots dealer lobbying campaign, lawmakers in Washington, D.C., have begun questioning General Motors Corporation and Chrysler LLC over their plans to cut dealerships.Last week the House Judiciary Committee held hearings in which the companies and the White House were severely criticized over plant and dealership closures and the job losses resulting from the Administration’s auto industry restructuring efforts. And next week the Senate Commerce Committee will hold a hearing on the automakers’ plans to shutter nearly 2000 dealerships across the country.It is clear that Congress has serious reservations now about Chrysler’s bankruptcy reorganization, GM’s restructuring plans and the Administration’s role in all of this. Congress is, apparently, looking for greater oversight of the auto bailout. The question is: will any of this public outcry help Chrysler or GM dealers marked for termination by these troubled automakers?The chairman and the ranking minority member of the Senate Commerce Committee announced they would hold hearings next week, calling on GM and Chrysler executives to testify on what the Senators have called unfair treatment of dealers. The hearing was scheduled after Senator Hutchinson, who is the ranking Republican on the Senate Commerce Committee, was able to hold up passage of a war spending bill until Chrysler President Jim Press wrote to reassure her on some concerns about how Chrysler is treating rejected dealers. Chrysler President Jim Press responded to the public criticism by saying the shuttered dealers would “receive a fair and equitable value for virtually all of their outstanding vehicle and parts inventory.” The dealers will “receive a daily report which specifically outlines each unit of inventory and its place in the transition process,” he said. Dealers say the Chrysler inventory reallocation effort simply adds insult to injury. The plan does not adequately compensate rejected dealers and comes with unacceptable strings attached.