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Top Stories
Senators Blast Automakers Over Dealer Closings
Congress Pushes Back on GM
GM, Chrysler Wrong to Shut Dealers, Lawmakers Say
GM's Strategy for Surviving Dealers Concerns Legal Experts
GM's Henderson, Under Pressure, Will Release List of Closed Stores
Cut-off Chrysler Dealers to Testify in Bankruptcy Court
Court to Hear Appeal on Chrysler Deal on Friday
NY Judge: Old Chrysler Has Little Need for Dealers
'Cash for Clunkers' Stalls in Senate
Top Stories
Senators Blast Automakers Over Dealer Closings

GM, Chrysler Defend Massive Shutdowns
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. "The way it was done was not very transparent," John McEleney, chairman of the National Automobile Dealers Association, said in an interview, referring to the method the companies used to choose which dealers to close. "The open market should have made the decisions."
Source: The Washington Post

[Editor's Note: There was a great deal of personal interest in Wednesday's hearing among senators, due in large part to the grassroots efforts by ATAEs and dealers. "This is the largest turnout that I can remember in 24 years on the commerce committee," said Sen. John D. Rockefeller IV, D-W.Va., chairman of the Senate Commerce Committee. David Regan, NADA vice president of legislative affairs, said, "Many ATAEs and dealers deserve a great deal of credit for making yesterday's hearing such a success. It was an important part of NADA's ongoing efforts in Congress to make sure dealers are treated fairly." Click here to watch the complete coverage of McEleney's senate testimony.]

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Congress Pushes Back on GM

Just two days after the General Motors bankruptcy was announced, Democratic and Republican senators slammed the company and it’s equally troubled cousin Chrysler for their plans to close thousands of auto dealerships. "It’s a nationwide tragedy that a lot of us feel very strongly about,” Sen. John Rockefeller (D-W.Va.), chairman of the Senate Commerce, Science and Transportation Committee, said Wednesday ... John McEleney, chairman of the National Automobile Dealers Association, urged the administration to provide Chrysler with the financing to buy back surplus vehicles and parts from terminated dealerships, something that the company is not promising to do under its bankruptcy terms, and to give the closed dealerships more time to wind themselves down. “No manufacturer has ever imposed such onerous terms or such a tight deadline,” McEleney said.
Source: Politico

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GM, Chrysler Wrong to Shut Dealers, Lawmakers Say

General Motors Corp. and Chrysler LLC were “just plain wrong” to take taxpayer funds and leave local dealers and their customers to fend for themselves, Senator Jay Rockefeller said as lawmakers faulted the automakers [Wednesday]. “Chrysler gave its dealers less than one month’s notice prior to termination, which is truly unbelievable,” he said. Auto executives “must have a terrible conscience” about what they are doing, said Senator Frank Lautenberg, a New Jersey Democrat. “There has been double-dealing here,” he said, referring to Chrysler retailers being asked to buy more cars and then being told they would close.
Source: Bloomberg

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GM's Strategy for Surviving Dealers Concerns Legal Experts

Legal experts say dealers concerned about the participatory agreements they received from General Motors Corp. yesterday likely have few to no options other than agreeing to the auto maker’s terms if they want to stay in business. Dealers have until June 12 to sign the agreement. Those who refuse to sign will have their franchise agreements placed in the “old GM” destined to be liquidated as part of the auto maker’s chapter 11 filing this week. National Automobile Dealers Assn. Chairman John McEleney blasted the new GM requirements in testimony [Wednesday] to a Senate committee. “If I sign it, I will be committing my business to spend hundreds of thousands of dollars that I know about today, and committing to millions of dollars of potential financial obligations in the future,” McEleney says.
Source: Ward's Auto

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GM's Henderson, Under Pressure, Will Release List of Closed Stores

WASHINGTON -- General Motors CEO Fritz Henderson reluctantly agreed [Wednesday] to comply with a senator's request to turn over the bankrupt automaker's list of dealerships to be eliminated. Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va, asked Henderson to supply the list, as well as analysis of cost savings that would result from closing the stores. Henderson protested that GM is not making the names public because discontinued dealers don't want to be identified. But in the end, he answered, "Yes, sir," when asked by Rockefeller to provide the information.
Source: Automotive News

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Cut-off Chrysler Dealers to Testify in Bankruptcy Court

NEW YORK -- Some of the 789 dealerships that Chrysler plans to close will begin presenting their case to bankruptcy court today, arguing that the automaker was undermining its turnaround by terminating the franchises. In bankruptcy court hearings last week ... attorneys for dealers questioned Chrysler's judgment in dropping the locations, some of which had recently received awards and complimentary letters from the company. Executives for Chrysler struggled to offer specifics on cost savings generated by the closures.
Source: Reuters

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Court to Hear Appeal on Chrysler Deal on Friday

Chrysler LLC's exit from bankruptcy could hit a speed bump Friday when a federal appeals court is scheduled to hear from a group of Indiana state pension and investment funds objecting to the auto maker's reorganization. A lot is riding on the outcome. The Obama administration is hoping a speedy restructuring of Chrysler through bankruptcy will signal the road ahead will be smooth for General Motors Corp. ... Moreover, Fiat can back out of the deal if bankruptcy proceedings go beyond June 15.
Source: The Wall Street Journal

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NY Judge: Old Chrysler Has Little Need for Dealers

NEW YORK -- Chrysler will have little need for the hundreds of dealers it wants to close if it completes its sale to Fiat as expected, the judge overseeing the automaker's bankruptcy said on Thursday. At the start of hearings in Manhattan's bankruptcy court on a motion to close the dealerships, [Judge Arthur Gonzalez] said once the Fiat sale closes, he did not see how the bankrupt business would need a dealer network. "Absent a car manufacturing business, the dealerships would not seem to serve any purpose for the debtor," Gonzalez said, but added there may be a case for the dealers to pursue damages.
Source: Reuters

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'Cash for Clunkers' Stalls in Senate

WASHINGTON -- Supporters have dropped an attempt to add "cash for clunkers" legislation to a tobacco regulation bill now before the Senate, a setback in efforts to boost car sales with federal subsidies. Two congressional aides said the measure was derailed by objections from the Senate Appropriations Committee to using money from the $787 billion economic stimulus package for the measure, which would offer up to $4,500 credits for consumers trading in older, low-gas-mileage vehicles.
Source: The Detroit News

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Quotable
 
"They are taking advantage of the fact they are in bankruptcy to change (franchise agreements) and make them much more unilateral. It's a total overreach."

   
-- NADA Chairman John McEleney, referring to GM's new continuation agreement that strips dealers of their basic rights, USA TODAY, June 4


"No manufacturer has ever imposed such onerous terms or such a tight deadline. Since this entire bankruptcy has been negotiated by the executive branch, Congress should intervene ... "

   
-- NADA Chairman John McEleney, in testimony before the Senate Commerce Committee, where he urged Congress to inject some fairness into GM and Chrysler's plans to drastically cut dealerships, Politico, June 3


"This is the largest turnout for a commerce committee hearing in my 24 years. So there's some pretty deeply held feelings here."

   
-- Sen. John Rockefeller, D-W.Va., chairman of the Senate Commerce Committee, in remarks at a hearing Wednesday, The New York Times, June 4


"It's a nationwide tragedy that a lot of us feel very strongly about. We're talking about dealers who invested everything they had … some of who are here today, and they're just looking into a black hole right now."

   
-- Sen. John Rockefeller, committee chairman, in opening remarks at a hearing Wednesday, Politico, June 3



"... it is our place ... to make sure that everyone is treated as well as can be in these circumstances."


    -- Sen. Kay Bailey Hutchison, R-Texas, in remarks to the CEOs of GM and Chrysler at a Senate hearing Wednesday, The Associated Press, June 3


"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."

   
-- Sen. John Rockefeller, committee chairman, voiced his support for the dealerships, calling the closings "a nationwide tragedy that a lot of us feel strongly about," The Washington Post, June 4


"I know you don't like it, but whether or not you like it, the burden that you're passing on to the dealer network is absolutely unconscionable. And we ought to be figuring out a way to redeem the problems that you've turned to the dealers."

    -- Sen. Frank R. Lautenberg, D-N.J., in remarks to GM and Chrysler executives at Wednesday's senate hearing, The New York Times, June 4


"A 90-year investment is just gone."

   
-- Russell Whatley, a Chrysler-Dodge-Jeep dealer in Mineral Wells, Texas, whose grandfather opened the business in 1919, The Associated Press, June 3



"What's happening today with America's new car dealerships is tragic, and Congress must assert itself."

   
-- Chrysler dealer Pete Lopez of Spencer, W.Va., in testimony before the Senate committee Wednesday, USA TODAY, June 3
Video Highlights
 
 
Car Dealers Trying to Buy More Time (NBC)

 
John McEleney's Testimony to Senate Committee (CNBC)



Fighting the Dealers' Fight (CNBC) 


 
Cutting Dealers a Mistake (Fox Business Network)



Vice Chairman Tonkin on Chrysler Closures (Bloomberg)


 
Should Government Decide Dealers' Fate? (CNBC)



The Case Against Closing Dealerships (CNBC)



In-Depth Look - Pent Up Auto Demand (Bloomberg)



NADA on Cash for Clunkers (NADA-TV)



NADA on Floorplan Credit Crisis (NADA-TV)


 Senate Testimony on Floorplan Loans (NADA-TV)
 Banks Turning on American Car Dealers? (WTNH-TV)
 NADA Tackles Industry Crisis (NADA-TV)
 McEleney Speaks at NADA Convention (NADA-TV)
 Demise of Dealerships Leaves Big Dent (NBC)
NADA on the Front Lines  (NADA-TV)


Click here for more video reports.

 


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