Auto-Makers Defend Dealership Closings

By Justin Duckham-Talk Radio News Service

The Presidents of General Motors and Chrysler, the two auto-giants that recently declared
bankruptcy, appeared before Congress Friday to defend their decision to close down several hundred dealerships.

“Today’s automotive industry cannot support the number of dealers currently in the market place,” said Chrysler President James Press during his testimony to the House Energy and Commerce Subcommittee on Oversight and Investigations. “The old Chrysler dealer network is not profitable and not viable.”

Press expects that closing down the dealerships will save the company $3 billion.

The nation-wide streak of shut-downs, which has been slammed by House Majority Leader Steny Hoyer (D-Md.) as having ‘zero’ economic benefit, came as a result of Chrysler and GM’s plan to redevelop their distribution network. The company will then presumably be in a key position to take their respective next steps. Chrysler is set to continue production under European auto-maker Fiat while the U.S. government will essentially own the majority of GM.

Chrysler is planning on closing 789 of their franchises. GM is set to close at least 1000 dealerships, although it has recognized appeals from 45 individual franchises. Chrysler has no such appeal process.

A handful of auto-dealers appeared before the subcommittee to voice their concerns over the shut-downs.

“I adamantly believe my constitutional rights have been violated. I think I am a victim of an illegal taking…I am hurt. I feel violated,” said Frank Blankenbeckler, the dealer principal of Carlisle Chevrolet-Cadillac.

Blankenbeckler was visibly choked up and at points appeared to be holding back tears.

A number of auto-dealers used their testimony to announce their support of the Automobile Dealer Economic Rights Restoration Act of 2009, which if passed will effectively halt the closings.