Automakers reconsider dealer closings

By Dana Hedgpeth
Washington Post Staff Writer
Friday, December 4, 2009

General Motors and Chrysler said Thursday that they plan to revisit their decisions this spring to close more than 2,000 dealerships, indicating that some of the targeted locations could be allowed to stay open.

The move comes in response to protests by scores of targeted dealers, who have vigorously fought the proposed closings with the help of industry groups. The dealers are now pressuring members of Congress to pass legislation that would force the companies to keep the dealerships open.

GM said it would have face-to-face meetings that could lead to dealers being reinstated or an offer of binding arbitration. Chrysler's review process will begin Dec. 10, while GM said it would begin reviews in mid-January.

GM has said it could save $2.5 billion annually by cutting about 1,300 dealerships. Already, 300 slated for closing have requested assistance from the company with winding down. Some dealers have appealed the closings and 80 have been reinstated, according to a GM spokesman.

Some dealers say that GM has overstated how much it can save in closing the dealerships and think that many were chosen unfairly.

"We just could not in good conscience accept the GM or Chrysler plans when they rely so much on flawed criteria and would make a mockery of the arbitration process," the Committee to Restore Dealer Rights said in a statement. "Under their plans, a dealer would have had a better change at winning the Powerball lottery than getting back in business." The group is headed in part by Jack Fitzgerald and Tammy Darvish, two major D.C.-area auto dealers.

Analysts said that the automakers' proposal appears to be an effort to stave off any intervention by lawmakers on Capitol Hill.

But some lawmakers said legislation could still be passed if the companies don't offer a fair and comprehensive arbitration process.

"The plans offered today by Chrysler and General Motors are a step in the right direction, but still fall short of what is needed to help reinstate profitable car dealers and put their employees back to work," said Rep. Chris Van Hollen (D-Md.). He said the two companies had received billions of dollars in taxpayer money, and yet were closing the dealerships, "many of them profitable small businesses employing thousands of people in communities all across the nation. Their logic didn't make sense then, and it still doesn't make sense today."

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