Senators Blast Automakers Over Dealer Closings
Thursday, June 4, 2009
Empowered by the government's emerging ownership role, members of a Senate committee yesterday excoriated General Motors and Chrysler for their decisions last month to close more than 2,000 dealers.
The senators have been besieged by auto dealers who say the franchise closures were capricious or unfair.
Chrysler is closing 789 on less than a month's notice, and GM aims to close 1,100 by next year and more in the future, as part of a massive industry restructuring being financed by the Obama administration.
Because the federal government is slated to own most of General Motors and 8 percent of Chrysler, some of the senators said they have a responsibility, as major shareholders do, to review company decisions.
Before GM chief executive Fritz Henderson and Chrysler President Jim Press could say a word, Sen. John D. Rockefeller IV (D-W.V.), chairman of the Committee on Commerce, Science and Transportation, voiced his support for the dealerships, calling the closings "a nationwide tragedy that a lot of us feel strongly about."
"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. It's just plain wrong," he said.
Some of the senators seemed uncomfortable weighing in on a corporation's internal decisions. But they said they had an obligation to get involved.
The Obama administration has sought to ensure that government ownership does not make the companies vulnerable to political pressure. Members of the administration's autos task force have said they will refrain from getting involved in day-to-day decisions of the car companies. The task force pushed for dealership cuts but did not specify how many or which dealerships would be eliminated, administration officials said.
Sen. Mark Warner (D-Va.) acknowledged the danger of "micromanaging" the companies but concluded that as government owners "we've got the right and responsibility to ask these questions."
Sen. Jim DeMint (R.-S.C.) said he is getting to know what "government-managed economies feel like."
GM and Chrysler say they must shrink their dealerships as part of the streamlining their operations, and many analysts and dealers agree. There are too many of them competing for car buyers to be profitable and thriving.
The company chiefs yesterday said they made the cuts reluctantly but that they were necessary. The companies said they mainly chose dealerships that were underperforming in sales or customer satisfaction.