Senators press GM, Chrysler on dealer closings; GM agrees to give committee list of those targeted

Tracking down the automobile dealers that General Motors wants to cut is about to become easier, but the list could grow soon. Those were the forward-looking headlines for rural journalists at today's hearing of the Senate Commerce Committee, which heard from small-town dealers and the heads of GM and Chrysler.

Under pressure from Alaska Sen. Mark Begich and committee Chairman Jay Rockefeller of West Virginia, Fritz Henderson, CEO of GM, agreed to give the committee "a closely held list of all of GM's closing dealerships," as described by David Shepardson of The Detroit News Washington bureau. But the list could grow as some dealers refuse to mete a June 12 deadline sign what the chairman of the National Automobile Dealers Association called "onerous, one-sided agreements."

"If we sign it, we sign all our rights way," said Pete Lopez of Spencer, W.Va, "a small rural town of 3,800 people." Lopez said Chrysler is shutting him out but is keeping the franchise of an unnamed West Virginia dealer who operates out of his front yard and sells 19 cars a year. "Some closing dealers expressed anger because Chrysler ... urged dealers to buy more vehicles earlier this year than they had planned to help the automaker survive," Shepardson reports.

Rockefeller said the companies must ease up, to save jobs, and "should not 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." Noting heavy participation by committee members, he said, "This is the largest turnout I can remember in 24 years on the Commerce Committee." Shepardson notes, "Dealers are politically powerful, making donations to nearly all members of Congress." (Read more)

"Industry analysts have long said that the sprawling retail networks hurt Detroit automakers because they force dealers ... to compete more against each other than rival automakers," driving down prices and profits," report John Crawley and Mari Saito of Reuters. But they note that is especially true in the suburbs of large cities. (Read more) Henderson said GM will keep many dealers in rural areas, where he said the company's brands have an edge on other manufacturers. Sen. John Thune of South Dakota told the car makers that dealerships "are sort of the center of gravity" in small, rural communities.

NADA Chairman John McEleney said, "No one has explained why dealer reductions will make Chrysler and GM more viable. ... Where is the accountability and the objective standard for these decisions?" Chrysler dealer Russell Whately of Mineral Wells, Tex., whose grandfather opened the family dealership in 1919, told the committee, "A 90-year investment is just gone, and neither my family nor my employees have any say about it. ... No dealership is a cost to Chrysler." Lopez said likewise, but Chrysler President James Press said closing dealers would save money in marketing, servicing and distribution costs. "Poor-performing dealers cost us customers," he said. Henderson said GM needs to reduce its per-car distribution cost of $1,000.