The following is a message from U.S. Congressman Bart Stupak:
U.S. Congressman Bart Stupak (D-Mich.), chairman of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, today held a hearing to examine the closure of GM and Chrysler dealerships. The hearing, titled “GM and Chrysler Dealership Closures and Restructuring,” examined the two companies’ plans to terminate nearly 2,000 automobile dealerships. Stupak delivered the following statement:
For much of the past 100 years, General Motors (GM) has been the largest automobile company in the world. The Detroit three - GM, Ford and Chrysler - have fueled the engine of Michigan’s economy as well as the economy of the United States for generations. Through their vehicle manufacturing, countless suppliers and a vast dealer network, the automobile industry has created and supported millions of jobs.
With the recent global financial collapse much of the domestic auto industry has been brought to its knees. In 2008 GM and Chrysler lost $30.9 billion and $17 billion respectively and in order to survive, they both recently filed for bankruptcy. In the bankruptcy process, GM has announced plans to close roughly 1,200 dealerships and Chrysler announced plans to close 789 dealerships nation wide.
The federal government has loaned billions of dollars to GM and Chrysler in an effort to help stabilize them. Billions more have been committed to assist them while emerging from bankruptcy.
Today’s hearing will examine several issues associated with GM and Chrysler’s decisions to close more than 2000 dealerships across the country. Among questions to be answered are:
Why do the manufacturers believe they need to close so many dealerships?
What criteria were used to determine which dealerships to close?
How do GM and Chrysler save money by closing these dealerships which are independently owned?
Why were Chrysler dealers given a mere 26 days notice that their franchise would be pulled?
Why were dealerships that had been meeting or exceeding their expected sales requirements still ordered to close?
Why did Chrysler effectively order dealers to buy more cars in January, but now refused to buy those cars back from dealers who are being forced to close?
Who made the decisions of which dealerships to close?
What are GM and Chrysler doing to assist dealerships with selling their cars, parts and tools before they are put out of business?
How will the dealership closures and restructuring make GM and Chrysler more competitive and profitable?
Being from Michigan I absolutely want to see General Motors and Chrysler survive. We have an old saying that “when the auto industry sneezes, Michigan catches a cold.” Now due to the global financial collapse, the entire nation is feeling the impact of a crippled domestic auto industry. Other than high gas prices, and food safety, I can think of few subjects that have brought the ire of so many Members of Congress as these auto dealership closures.
I understand the fact that Chrysler and GM need to improve their bottom line. I also understand that the import brands have far fewer dealerships with higher sales volumes per dealership. What many of my colleagues and I don’t fully understand is why there is a need to close so many dealerships and why dealerships that appear to be performing well are now being told to close their doors?
We will hear from Chrysler today that the average Chrysler dealer sold 405 vehicles and LOST $3,431 in 2008. We will also hear from Mr. Dan Kiekenapp of Tacoma Dodge in Tacoma, Washington. Tacoma Dodge had net sales exceeding $1.7 million last year, was one of the top 100 dealers for sales of parts in 2008, and was the number one ranked Dodge dealer in Western Washington during the month of April this year but still received a closure notice from Chrysler. I look forward to asking Mr. Press how he reconciles this decision to close Tacoma Dodge.
As I mentioned earlier, I want to see GM and Chrysler return to strong and vibrant companies. I am, however, concerned that the accelerated time frame for dealership closures and the way in which dealers have been treated may actually damage the brands more than it helps.
I am also concerned that the closures will hurt rural communities disproportionately. In my vast rural district, if a dealer closes down, it can mean a 2 hour drive for you to reach the next closest dealer. This will cause added expense and hardship for my constituents who need to have warranty work or special service done at a certified dealership. In addition, when it comes time to purchase a new vehicle, many of my constituents will abandon GM or Chrysler and go to whichever brand is still locally sold by a person they trust within their community rather than traveling to a huge, impersonal big-box dealership where they don’t know the sales and service staff.
In closing, I want to thank our GM and Chrysler executives for coming here today. This Committee understands how busy you are and greatly appreciates you taking the time to work with our staff and attend today’s hearing. In addition, I want to thank the dealers who have come from every region of the country testify today. I know that in many instances you are facing the loss of your livelihood and to take the time and expense to travel to Washington is much appreciated!
