Friday, May 22, 2009
Lawmakers: more time for Chrysler dealers
WASHINGTON (AP) — Underperforming Chrysler dealers targeted for closing should get more time to wind down their car dealerships, lawmakers said Thursday, as several groups urged the Obama administration to reconsider its work to restructure the faltering U.S. auto industry.
Sen. Kay Bailey Hutchison, R-Texas, pushed a proposal to give Chrysler dealers 60 days to close their dealerships instead of three weeks outlined by the company. Seeking leverage, her measure would prevent the Treasury Department from providing funding to an auto company that failed to give a dealership at least 60 days to wind down its operations and sell its inventory.
“The dealers are the roadkill in this,” Hutchison said. It was unclear if her plan, which could be attached to a spending bill, would overcome procedural hurdles, but lawmakers held discussions with Chrysler and the administration to seek more flexibility for the dealers.
The widespread dealership closings were among several areas of concern for lawmakers, bondholders and consumer groups, who want the Obama administration to reevaluate its handling of General Motors and Chrysler.
Chrysler LLC, which has received $5.8 billion in federal aid and filed for bankruptcy, said last week it intends to close about a quarter of its 3,200 U.S. dealerships by June 9. General Motors Corp. has told about 1,100 of its dealers — about 20 percent — that they would be dropped by late next year.
Auto dealers say the swift closing of dealerships could lead to significant job losses and leave many dealerships with large inventories of unsold vehicles.
General Motors has received $15.4 billion in government loans and faces a June 1 deadline to complete its restructuring or head into Chapter 11 bankruptcy reorganization.
“We must work to keep as many of these businesses open as possible,” wrote Sen. Jay Rockefeller, D-W.Va., in a letter to GM and Chrysler executives. In West Virginia, Rockefeller said 17 of 24 Chrysler dealerships were expected to close and an undisclosed number of GM franchise agreements would end in October 2010.
Separately, consumer advocate Ralph Nader urged Congress to hold hearings into dealership and factory closures at Chrysler and GM, arguing that Congress has ceded oversight of the automakers’ restructuring to an auto task force appointed by President Barack Obama.
“If GM goes into bankruptcy ... what will be launched would be a conclusive Death Star to tens of thousands of jobs, thousands of small businesses and adverse effects to hundreds of communities around the country,” Nader said. “Congress is entitled to ask, ‘Does this have to happen?’”
During a House hearing, Nader and others questioned whether the automaker really needed to close so many dealerships and factories and whether taxpayers’ interests were being adequately protected.