Auto executives defend closing of dealerships

WASHINGTON (AP) — General Motors and Chrysler executives defended the closings of hundreds of dealerships Friday as House lawmakers questioned whether the decisions would save any money or help the troubled companies rebound.

“Many dealers and the communities they serve frankly feel blind-sided,” said Rep. Greg Walden, R-Ore.

GM CEO Fritz Henderson told a skeptical House panel that the dealer cuts were “quite painful” but necessary to preserve over 200,000 jobs at GM’s remaining dealers.

“In essence, this is our last chance,” Henderson told the House Energy and Commerce Committee’s oversight and investigations subcommittee.

The committee released a GM document that provided a state-by-state list of 1,323 dealerships the automaker plans to wind down. Pennsylvania had the most with 90, followed by Ohio with 79, Illinois with 66 and California with 65. New York had 60 and Michigan, where GM’s headquarters is based, had 58 outgoing dealerships. Alaska was the only state spared.

Chrysler Deputy CEO Jim Press said the cuts were “the most difficult business action” of his career but were among the shared sacrifices by the United Auto Workers union, bondholders and others needed to save the company.

House members expressed dismay at the closing of 789 Chrysler dealerships and plans by GM to shutter about 1,350 by the end of next year. They said many rural communities would be left without dealerships while thousands of jobs would be lost without any firm guarantees that GM and Chrysler, which have received billions in federal aid, would benefit long-term.

“When it comes time to purchase a new vehicle, many of my new constituents will abandon GM or Chrysler and go to whichever brand is still locally sold by a person they trust within their community,” said Rep. Bart Stupak, D-Mich., the subcommittee’s chairman.

“How does it help to close profitable dealerships?” asked Rep. Diana DeGette, D-Colo., who said 14 profitable Chrysler dealerships were closing in her home state.

Dealers said the closings of their stores risked putting 100,000 jobs at risk and charged the companies with failing to be transparent about how they reached their decisions. Many dealers said their stores had been performing well despite the economic downturn.

“We have been GM to our community,” said Bob Thomas, owner of Bob Thomas Chevrolet-Cadillac in Bend, Ore. “Now it is a dark time when GM must abandon our town, our region and us.”

The auto executives said their companies have been slowed by too many dealers, with many representing the same company often competing against each other for sales.

Henderson and Press said after losing customers and market share to foreign competitors, their companies needed to scale back all their operations to become leaner and return to profitability.

Press said the 789 discontinued dealers met only a portion of their minimum sales responsibility and represented 55,000 units of loss sales and $1.5 billion in lost revenue in 2008.