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June 7, 2009
Dems express 'growing concern' over dealer closings
Rick Moran
Both Chrysler and GM are closing profitable dealerships and Democrats in Congress want to know why.
They ask the $64,000 question; how are the auto companies supposed to climb out of bankruptcy when some of their best dealers won't be there to help them sell cars?
Amy Parnes at Politico has the letter. Here's a short excerpt:
We are writing to express our concerns about General Motors' and Chrysler's decision to close profitable automobile dealerships across the country, and urge you to ask GM and Chrysler to delay final action on proposed closures pending further review of the decision to consolidate dealerships and the process by which Chrysler and GM selected the dealerships to close.
Closing these dealerships will put over 100,000 jobs at risk at a time when our country is shedding jobs at an alarming rate. We also question the criteria being used to determine which dealerships should be closed and the fundamental fairness involved in this effort. It is our view that the market rather than leaving it up to the manufacturers whose poor leadership contributed to their demise. Furthermore, we believe car dealers will be key players in any effort to revive the American auto industry.
We believe the dealerships are one of the auto industry's key sources of strength and the manufacturers should continue to honor their agreements and contracts. The dealerships, and their more than 1 million employees, form personal relationships with customers that often contribute to brand loyalty and will be key to General Motors' and Chrysler's recovery following this economic downturn. While we understand the desire to reduce the number of unprofitable dealerships, no one has yet sufficiently explained the need to close profitable dealerships.
The fact is, no one has been able to ascertain exactly what criteria was used in closing dealerships. It seems unlikely that politics was solely the reason (although there are still unanswered questions about why some politically connected dealers were allowed to remain open while others in their territory were closed). And Chrysler's explanation that they closed dealers who only carried a few lines of their products rather than all 4 has been shown to be dubious.
No one knows if dealers who gave the automakers a hard time were shut down as part of an effort to get rid of troublemakers. We don't know if non-business reasons were used at all. Time for both the administration and the auto makers to come clean and give us the facts. Many communities will be adversely affected by these dealer closings and are owed more than doubletalk.
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