Senators seek more info on dealer closures

AP News
Posted: Nov 20, 2009 4:39 PM

Senators are calling on General Motors and Chrysler to release more details on ongoing talks over the automakers' plans to close thousands of auto dealerships as part of their bankruptcies.

In letters Friday to the two companies, the majority of the Senate Commerce Committee sought information on the negotiations brokered by Congress between dealers and the automakers over whether the decisions to shutter dealerships should be reversed.

"Given the federal government's ownership stake in GM, it is our shared obligation to ensure all impacted dealers are treated as fairly as possible," the letter to GM stated, signed by 22 of the committee's 25 members. The Chrysler letter included similar language.

GM is cutting 2,400 dealerships from its 6,000-dealer network by the fall of 2010 by not renewing franchise agreements and winding down stores with outgoing brands. Chrysler slashed 789 dealers as part of its bankruptcy proceedings this summer, leaving it with about 2,400.

The companies say the moves are needed to cut costs and align their dealerships with the lower demand for cars.

The federal government owns roughly 60 percent of GM and nearly 10 percent of Chrysler as part of its rescue of the auto industry, and lawmakers worried about big job losses are pressuring the companies to reverse course on dealer closures.

That includes legislation to force GM and Chrysler to restore closed dealerships. The House passed legislation in July that would force GM and Chrysler to restore franchise agreements with dealers as a condition of partial government ownership. The Senate has yet to take it up. The Obama administration opposes efforts to overturn the dealer closings.

Talks began in September over ways to resolve the issue without legislation, but no agreements have been reached yet. Sticking points include the appeals and review process for closed dealers and financial assistance from the automakers to those that will be shuttered.

GM spokesman Greg Martin said in a statement that the company is in "productive discussions" on the dealer restructuring plan and that it hopes to reach a solution without legislation. A Chrysler spokeswoman did not immediately reply to a request for comment.

Rep. Chris Van Hollen, D-Md., said this week that a deal needs to be made by the end of the year.

"Either we have to come to some kind of compromise between the manufacturers and the dealers _ a non-legislative compromise _ or I think it's very likely that you're going to see some legislation on this issue because it's hard to see the House budging at this point," he said.

The letters to GM and Chrysler also asked for additional details on issues such as whether closed dealers get the first right to reopen if the automakers decide to open franchises in the area and on help for closed car lots such as retraining of auto mechanics.


Associated Press Writer Ken Thomas contributed to this report.