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SSC


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GM, Chrysler Say Slashing Dealerships Key to Survival
GM president Fritz Henderson and Chrysler President James Press told the Senate Commerce Committee in prepared testimony that there are too many dealers and the networks date from the 1940s and 1950s when their companies were world leaders.

AP

Wednesday, June 03, 2009
Fighting to survive, top executives from General Motors and Chrysler on Wednesday defended their decisions to slash dealerships around the country, calling the moves unavoidable despite the pain to many loyal dealers and customers.

GM president Fritz Henderson and Chrysler President James Press told the Senate Commerce Committee in prepared testimony that there are too many dealers and the networks date from the 1940s and 1950s when motorists lived farther apart and Detroit automakers led the world in sales.

But after hemorrhaging customers for decades and losing market share to foreign competitors, they said the companies need to scale back all their operations to become leaner and profitable as they operate under bankruptcy protection.

"Reinventing GM -- real change -- does require shared sacrifice," Henderson said. "These are tough times for everyone in the GM family. And, as part of the GM family, our dealers are also being asked to bear some of the sacrifice in order to build a stronger, more viable GM."

As for GM's smaller rival, "there's not enough business for the number of dealers Chrysler has today, given that we have less than two-thirds of our former sales volume," Press said.

"Poor performing dealers cost us customers. It's true that dealers are our customers, but it works both ways. If they don't sell cars, we don't either."

Committee Chairman Jay Rockefeller, D-W.Va., suggested both companies were abandoning customers and dealers, some of whom had been dealers for decades.

"I don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real notice and no real help," Rockefeller said in prepared remarks. "That is just plain wrong."

He said that the companies seemed to be implying "that the dealers themselves are responsible for the companies' problems."

The committee made the prepared testimony available to The Associated Press in advance of Wednesday's hearing.

Lawmakers contend the dealership closings will put thousands of people out of work and offer few savings to GM or Chrysler, which have received billions in federal aid as they attempt to restructure and return to profitability.

Chrysler LLC has identified 789 dealerships that it plans to close next week, about a quarter of the company's dealership network. The Auburn Hills, Mich., automaker's plan has drawn fire from lawmakers because dealers received only three weeks' notice.

General Motors Corp. told 1,100 dealerships that it does not plan to renew their franchise agreements in late 2010 and expects to shed another 900 dealerships through attrition and by selling or discontinuing its Hummer, Pontiac, Saab and Saturn brands.

Two small-town dealers singled out by the committee contended that the loss of their dealerships could bring personal and community anguish.

"I have met every financial obligation put forth by Chrysler and GM," Peter Lopez, a GM and Chrysler dealer in Spencer, W.Va., said in prepared testimony. "Now ... they want to shut me down. What gives the government the right to do that? I'm a taxpayer and they're getting taxpayer dollars. It just doesn't add up."

Russell Whatley, a Chrysler-Dodge-Jeep dealer in Mineral Wells, Texas, said his grandfather opened the business in 1919. "A 90-year investment is just gone," he said, "and neither my family nor my employees have any say about it."

Chrysler dealers have only until June 9 to close down. "That termination date is needed to ensure that our new dealership structure will be firmly in place at or about the time the new company is formed with Fiat, something understandably important to Fiat," Press said.

Chrysler says that Chrysler dealerships have resold or redistributed about 90 percent of their vehicle inventory and parts through a company program. But dealers being let go want the Obama administration to give them more time to close their franchises and provide additional financing to help Chrysler buy back inventories, parts and specialized tools from the dealerships.

"We have an eight-month supply of vehicles and only three weeks to clear them out," Whatley told the committee.

GM said the dealers it's not renewing are being given until October 2010 to shut down. That gives them an opportunity to "sell down their vehicle inventories and provide warranty service to customers, thus winding down their business in an orderly fashion," said Henderson.

Car dealers are a potent political force, contributing more than $9 million to federal candidates for the 2008 elections.

GM and Chrysler have said the dealership reductions are a painful part of their restructuring, which also has required concessions from union workers and bondholders. Seeking to address the concerns, Troy Clarke, president of GM's North American operations, and Press met with committee members before the hearing.

Requests to the administration to give dealers better terms creates a potential conflict for the White House, which has said it will refrain from running the day-to-day operations of the companies and delegate those decisions to the auto companies' management. The government is expected to receive a 60 percent stake in GM and a 10 percent share of Chrysler in exchange for the federal aid.

SSC


Admin
Well if slashing almost 3000 dealerships is recovery then something is terribly wrong, what happened to boosting jobs and the economy..Sounds like a Govt. run auto industry is going to be selectively union run . These people who put their lives in GM and Chrysler are screwed , another Govt snafu for sure.

Guest


Guest
I hate to be so pessimistic,but I can conceieve of no way for GM to recover. The union workers,feeling priviledge,will skate through their jobs. We weren't union at the time (I was salaried) but I worked for Avco-Lycoming totally under government contract and direction in 1968. Gov't specs; the whole bit. We would be told to work at our desks whether we needed to or not. We worked every Saturday. We would show up,sign in, and go straight to Harold's Bar and get loaded. The bossman too. GM will be given a quota of econo cars to build whether there are buyers or not. The GM management will enter the market knowing they can underprice their product and not worry about profit.The dealers,operating on a cost plus basis, will give the cars away at any price. Why not? Ford will suffer the fate of those who compete with a government monopoly. Chrysler will survive,but it won't be the Chrysler we knew. It will be Jeep/Fiat. I hope none of these things obtain,but I have reason to believe they all will. Recovery? Sure. One can call this "recovery", but I don't. The patient broke his leg for sure, but that is no reason to be forced into a wheelchair for years,if not forever.

rosco 357


Veteran
gee i have mixed emotions, first i will say, and i forget the year, if it next year or the next, chevy i think is coming out with what is suppose to be really good looking good gas millage car, i wish i knew the name, if i did i forgot, OK i know how some of them feel i worked for 20 years and my plant closed, on the closing of the dealerships, well gm was going under no matter what the government did, so was chrysler, GM was just not keeping up with the new world, it had not many cars with great gas millage, someone droped the ball , and honda and toyota took market share big time from them, gm depended on the big suvs, as they had good profit in them, but then gas went up, so sales went down, since GMs, sales were on the decline, and a large amount of dealers, i would think alot of dealers would have not made it anyway. i remember when american motors went under. when my uncle sold his nissan dealership he had for years, and had american motors also but ofcourse just had nissan when he sold and retired, a big dealership that has many different cars, bought him out, just to get his nissan dealership, because i think there was some kinda rule nissan dealerships had to be so far apart,, they did not want the land or anything, they bought all of it just to get the nissan dealership at there place, for 3 millions bucks.as sad as it is alot of dealerships selling just a few cars, will not work, fewer dealerships selling will sell more since its plain logic, just like u would not want to many of any thing be it same food change or whatever to close together, its is sad but even if the government was not involved, and gm would have bankrupted anyway, they would have closed dealerships, i dont even know which ones here will close, if some are to close together i image one will be closed, the honda plant here is leasing land to park cars, they have overstocked and some places have cars as far as u can see,honda is cutting back production, and offering early retirements, i think here, but i know it sad. but the end game i think would have been the same no matter what....

gypsy


Moderator
I do to Rosco have mixed emotions,I hope it produces good looking efficient cars and lots of new jobs,i know that is a big bill, but it can be done~ i am very optimistic, we need it

SSC


Admin
I understand closing over stocked unproductive dealerships, I do feel sorry for the ones given 7 days to get rid of cars and shut their doors. But on the up side US plants are moving overseas and offering US workers to follow the company if they want work. Guess that is Obama's plan for job recovery ???

gypsy


Moderator
optimism, i believe
Americans will overcome this great burden.
we have in the past we will in the future~

Good Luck to them i say, harder work, rebuild ,and become stronger..

rosco 357


Veteran
SSC wrote:I understand closing over stocked unproductive dealerships, I do feel sorry for the ones given 7 days to get rid of cars and shut their doors. But on the up side US plants are moving overseas and offering US workers to follow the company if they want work. Guess that is Obama's plan for job recovery ???

u know it funny, the overseas car makers are moving here, and we may move there, lol, just our state as i have said many times , has a mercedes plant, honda, and hyundia, and now just 6 miles from bama in georgia my nephew is welding on the new kia plant being built, i heard ppl 2 years ago say GM is not going to survive, we lost pontiac, and i bought both my girls at differnent time, when they got like a late jr or senior in HS, a new pontiac sunfire, actually i got kims close, if not the first one in birmingham, i ordered it and it took 3 months to get it, as they kept closing down the production line, because the wanted things perfect, body fit, and paint were 2 times i know of, it was the first one that dealership got in , in 95, and hollys was a 98,im not sure what it was called but i saw a real pretty GMC suv today, not a body style i had seen, i dont think, i looked for the name but could not read it,well its summer so gas is going up, every year, something is totally fishy,

gypsy


Moderator
rosco i heard on the radio today, forgot the announcer,but it was cnn or something like that, who said the same thing something is fishy on gas prices~ something about making more efficient cars~ gas prices would rise?? i may have not caught it all kind of came in onthe tail end~

rosco 357


Veteran
SSC wrote:I understand closing over stocked unproductive dealerships, I do feel sorry for the ones given 7 days to get rid of cars and shut their doors. But on the up side US plants are moving overseas and offering US workers to follow the company if they want work. Guess that is Obama's plan for job recovery ???

when ur up against toyota and honda, and even hyundia, it will be tough,, obama says they want the gov, out of the mix as soon as possible, i really have not studied this enough,,i was a 20 year union stealworkers union,, but i blame the union some, gm could not compete with some of the union rules, the honda ppl here make good money, and mercedes here, but not like what gm has to pay with benefits , its all a big mess ,,

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