Highlights: GM and Chrysler dealership Senate hearing

Yesterday, the U.S. Senate Commerce, Science and Transportation Committee held a rather lively hearing on GM andChrysler dealership closures that brought insight and depth to the ongoing restructuring and its local impact. (Read: "What do the automakers have against their dealers?" and "Watch for these problems from a failing or closing dealership.")

Committee Chairman Jay Rockefeller commented that it was the best attended hearing he recalled in his 24 years, and for good reason. It brought out the challenges and personal tragedies surrounding the fast-moving bankruptcy proceedings.

Below are highlights from the major participants, as selected by the Senate for a press release. Read the complete transcripts of the submitted comments from Jim Press, President, Chrysler LLC (pdf) and Fritz Henderson, Chief Executive Officer, General Motors Corporation (Web page). View the Senate Webcast.

“Let me be very clear – 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. That is just plain wrong. We are talking about dealers who have invested everything they have in their dealerships, people who have contributed to their communities, and whose families in many cases have been selling automobiles for decades. We are also talking about the consumer. People who are working as hard as they can to make ends meet in this challenging and difficult economy and doing the very best they can.”
— Senator Jay Rockefeller IV, Chairman of the Senate Commerce, Science and Transportation Committee

“Mr. Chairman, the recent decisions to close my dealerships simply astounded me. When I purchased the dealership, the companies welcomed me with open arms. Since that time, I have been a faithful customer of both Chrysler and GM, even purchasing additional vehicle inventories earlier this year, at Chrysler’s insistence, to help the corporation through this economic recession. In recent months, I purchased additional used vehicles from auctions conducted by Chrysler Financial. I have met every financial obligation put forth by Chrysler and GM. Now Mr. Chairman, 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.”
— Pete Lopez, President and CEO, Spencer Auto Group, Roane County, West Virginia

“You just can't close a dealership in 3 weeks, it is not possible. Over the past 3-4 months we were practically forced to order heavy inventories. We were told, "Chrysler has no cash-flow", that they "Rely on the dealers", and that if we do not order vehicles "we will all be out of business". We were also told they "will remember who did not help". Now, we have an 8 month supply of vehicles and only 3 weeks to clear them out. Other dealers are full, Chrysler Financial is gone, and GMAC is not on board yet. There is just no place to go.”
— Russell Aubrey Whatley III, Owner/Dealer, Russell Whatley Motor Company, Texas

“As the Chairman of NADA, I have represented dealers in three meetings with the President’s Auto Task Force as well as in conference calls, and have provided at their request many documents and data. At our meetings with the Task Force, we have repeatedly explained the fact that dealers are not cost centers for manufacturers but rather externalize the manufactures’ costs. Dealers are the largest source of revenue for the manufacturers, and to the extent there is “overdealering” in certain areas, the past 50 years the dealer population has declined every year due to orderly consolidations.”
— John McEleney, Chairman, National Automobile Dealers Association

“Given the auto industry depression, Chrysler had no choice but to seek Chapter 11 protection. Facing that reality, we used a thoughtful, fair process, and we are doing everything possible to soften the impact to everyone affected. Realignment of our dealer network will help create a vibrant new company, with a stronger and leaner organization, and a key partner in Fiat. Moving forward with 75 percent of our dealer network is far better than the alternative of liquidation, which Chrysler will face if the sale of assets is not finalized and the alliance with Fiat is not completed.”
— James Press, President, Chrysler LLC

“These are tough times for everyone in the GM family. And, as a 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. The reality of our situation is this: all parts of GM, including the dealer network, must become smaller and more efficient to reinvent GM as a company that is not only viable, but capable of surviving cyclical downturns. GM’s viability plan calls for fewer, stronger brands, as well as fewer, stronger dealers.”
— Fritz Henderson, Chief Executive Officer, General Motors Corporation

The story for these two embattled American giants isn’t over, and we will continue to cover the news and consumer impact here in the Cars blog and on the Autos Crisis hub.