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House bill seeks to reverse dealer closings at GM, Chrysler

07/08/2009, 7:24 PM

By Drew Johnson

More than 3,100 General Motors and Chrysler dealers could be in line for a new lease on life as a House bill to overturn dealer closing passed a House committee vote last night. The bill, part of larger spending bill, will move to the House floor next Wednesday.

Championed by Rep. Steven LaTourette, R-Ohio, the bill would restore thousands of dealers that were terminated during bankruptcies at General Motors and Chrysler. GM plans to shed about 2,400 dealers through its bankruptcy process while Chrysler has already eliminated 789 dealers.

“Car companies have used bankruptcy to run roughshod over state bankruptcy laws,” LaTourette told Automotive News.

Not surprising, General Motors opposes the House bill. “Such legislation, if passed, would put our long-term viability at risk,” GM spokesman Greg Martin said.

“We’ve taken extraordinary efforts, from product planning to manufacturing to labor agreements, to reinvent the company, and we need a dealer network to match. This legislation seeks to overturn the Bankruptcy Court’s decision after the fact to protect a single stakeholder among so many that have been called to sacrifice during our restructuring.”

Chrysler has yet to comment on the bill.

Although the bill passed a House committee last night, it still faces plenty of opposition. The move to reinstate all dealers cut by GM and Chrysler would largely negate the government’s efforts to save the Michigan automakers, which could prove to be a costly reversal for the U.S. taxpayers.

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07/08, 7:38 PM

posted by:

Madcapp

I hate to point out the obvious, but the less dealers you have, the less product you sell.

07/08, 7:45 PM

posted by:

idrinorbarsaku

why keep someone running that is doing bad for a company?? I understand that it puts people to work, but should they even be working if they are not successful??

07/08, 7:50 PM

posted by:

A.J.

It doesn’t make sense.

But since GM is owned mostly by the government now, the bill will pass, and GM will have a lot more weight to carry. I have to disagree with our wonderful government (I’m NOT going to go into a political conversation right now), but keeping the dealers open can seriously hurt GM’s long-term viability.

07/08, 8:18 PM

posted by:

gta89mike

Somewhere I read that the 2400 GM dealers that are closing only sell 7% of total sales for GM. So if all the remaining dealers don’t do anything different, GM only loses 7%. But the remaining dealers are the good, strong dealers. Sales should increase just by getting rid of the bad apples and not giving customers the ability to shop the same product at 5 places within 20 miles, thus increasing profits. These dealers need to stay closed.

07/08, 8:28 PM

posted by:

Borat

I hear caaaching for another 50 billions and it ain’t over……… Pelodi, Madam Clinton and the rest of establishment are far from fat. They have to gain wight and start singing, then it will be over. Another 100 billions towards dealers who buy politicos and unions who elect a-holes.

07/08, 8:50 PM

posted by:

Yomama Sophat

“I hate to point out the obvious, but the less dealers you have, the less product you sell.”
@Madcapp,
I used to think the same, until I found out that Honda and Toyota are kicking the Detroit 3’s arses with less than half the amount of dealers…

07/08, 9:17 PM

posted by:

Lariat Luxury Locomotive Liner No.3

Good gawd, even more damn automotive welfare. Hell, just send the taxpayers the bill, they won’t care.

07/08, 9:21 PM

posted by:

DrFill

Toyota sells almost the same amount as GM’s 6 brands with 1400 dealers
GM envies this efficiency, and wants to learn from it
Looks like our government prefers to keep the pork
What a shock
DrFill

07/08, 9:31 PM

posted by:

johnnycanuck

These are probably the same idiots who saw nothing amiss as they sat in Starbucks while looking across the street at another Starbucks.

07/08, 9:55 PM

posted by:

Impulsive

Better they spend a fraction of all this bailout money in this industry to save MANY workers that actually produce something as opposed to the banking industry that produced nothing but bad debts on gambles that had no chance of paying.

Wake up, idiots … there are bigger fish to fry than the little sardine here, as smelly as it may seem.

Watch what happens VERY shortly with state bankruptcies, MORE banks going under and the US dollar tanking. That’s where your misdirected crying and complaining should be focused … orders of magnitude worse than what is going on here.

07/08, 10:17 PM

posted by:

Lariat Luxury Locomotive Liner No.3

Better they spend a fraction of all this bailout money on other areas such as education, and businesses that actually stand a chance in tomorrow’s world, than those who failed in today’s (GM, Chrysler).

07/08, 11:36 PM

posted by:

Impulsive

… riiiiiiiiiight … so your unemployment numbers would be stratospheric, government payouts for employment insurance and welfare would explode, ZERO tax revenue from the industry and, undoubtedly, riots.

Again, it’s a fraction of what the banking industry got so reposition your gun’s barrel elsewhere.

This site is FULL of fools who have no business publically posting anything. No wonder your country is a failure.

07/08, 11:37 PM

posted by:

mmmfloorpie

Obama would never sign this legislation…

Less dealers = more dealer profits… GM and Chrysler aren’t profitable enough to sustain this many dealers.

07/08, 11:39 PM

posted by:

fishsticks

Even better why don’t we let people spend their own money, whether that be education or running a car dealership. If these are such viable dealers then let the Congress members buy the franchise with their own money. I guarantee that if they came to the table with enough money the auto makers would reconsider and Rep. Steven LaTourette, R-Ohio, et al. could get rich to boot.

07/09, 1:50 AM

posted by:

leftwingagenda

yes, madcapp, you are not correct in your assumptions…you don’t sell more cars by adding more dealers…that’s not how it works…putting a chevy dealer on every block will not result in more chevy sales, what it will do is raise chevy’s overhead to the point it collapses…economics 101…and as it’s already been pointed out – but maybe you need to read it again – toyota can sell as many or more cars as GM, but with 1/2 to 1/3rd the number of dealers…your premise is false…

this initiative by the republican from ohio is probably little more than a public gesture to the dealer networks affected, because i doubt this guy really thinks this effort will get very far…it’s completely contrary to the restructuring effort…and i’m betting there won’t be another multi-billion bailout added on to the tab…

07/09, 7:53 AM

posted by:

carstuff

8 months ago it was let GM and Chrysler fail. They do not really matter to us. Who cares if all the dealers go under and suppliers go under.

Now that they have failed and trying to cut some of the issues that caused the failure it is: cannot do that it would hurt me!

07/09, 8:23 AM

posted by:

Pauly

Sounds like a stupid bill. If GM and Chrysler can’t sell any cars, why should they keep these dealers open?

07/09, 9:25 AM

posted by:

S2L2SC

There is an easy solution to the cost problem. The dealers get paid upgrade assistance, marketing assistance, etc. based on how many cars they sell – that way the is no extra cost associated with the extra dealers – the dealers that actually sell product are supported, and those that dont are not.

07/09, 9:32 AM

posted by:

Flippo789

@ Impulsive

Don’t worry, unlike you apparently, we are able to handle multiple guns. We are all just as upset if not more at the banking industry, but that is not what this site is about.

07/09, 9:41 AM

posted by:

golf4me

According to the constitution, laws cannot be retroactive. I know it doesn’t matter to the musilim extremist, son of communist spys we voted as president is in office, I’m just sayin…

07/09, 10:22 AM

posted by:

leftwingagenda

lol@golf

you’re a sad excuse for a human being, i’m just saying…

07/09, 10:33 AM

posted by:

mayer_ray_nagin

Well, so much for the concept of the govt not micromanaging “The New GM” based on political expediency. What’s gonna be next – a dleaship closing czar beholden to congress this time?

Just another reason to not buy a GM again, like I need one.

07/09, 10:34 AM

posted by:

beatusmongous

I thought dealers were privately owned, and not actually part of the brand they represent.

07/09, 10:53 AM

posted by:

mayer_ray_nagin

Beatus, they are, but to represent GM as an authorized dealer they need a contract with GM. GM cut them off for a variety of reasons, and now because GM is doing what congress scolded them to do 6 months ago congress is pissed and is trying to pass bills forcing allegedly private businesses to do as our Overlords in DC dictate.

07/09, 12:47 PM

posted by:

RaineMan

This is ridiculous. The entire point of restructuring GM & Chrysler was to trim the fat and eliminate overlap in their product offerings and network coverage. If you open up all the dealers you just closed we are right back at square one… just a couple billion dollars in the hole.

I’m seriously worried about our Govt. They seemed to have all the good ideas and knew exactly what to say and how to say it around election time… but it seems that they’re just another bunch of idiots just like the last ones they replaced.

Is there a way that we can vote everyone who is in office now out, and replace them all with new people? Preferably someone who has never done it before.

07/09, 4:50 PM

posted by:

global_lightning

Wow, and this guy is a Republican, supposedly the party of free markets, entrepeneurship, and minimal government interference. Adam Smith must be spinning in his grave.

07/09, 5:44 PM

posted by:

elmdodge

wow do you even realize what free market even is you jackass ! my business has been around for 50 years and because i i do not kiss the factorys ass and by the crap they shoud not have been making i get booted , you guys are pathetic sheep buying into factory and obamas media hype , i have been more profitable than gm and chrysler , ask chrysler what kind of compensation jim press gets and that would pay chryslers so called expense to service these dealers , do you
realize the parts and special tool costs that chrysler screwed these terminated dealers on , these entrepeneurs took all the risk , and chrysler should live up to their dealer agreements to buy back 100% of mopar auto parts and their so called special tools ,believe me i like selling cars that sell on thir own merit not on rebates , chrysler and gm have the same mgmt thats been killing them . jim press should be terminated .

 
 
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