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Olympia Snowe

Bankrupt Automakers Must Assist Dealerships Facing Closure
By Senator Olympia Snowe
Jun 6, 2009 - 1:13:39 PM

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Like many Americans, I am astonished to see two of our three major automakers operating under bankruptcy protection. As a result of its bankruptcy, Chrysler announced it would be closing 789 dealerships nationwide by June 9 and has given its dealers three weeks to eliminate inventory or be left with no assistance from the automaker. General Motors will slash 1,100 dealerships by October of 2010 without proper clarification of the rationale behind the closures. In total, these closures will result in the loss of more than 100,000 jobs nationally, as well as the loss of vital sales tax and other revenues to state and local governments who are in dire need of those dollars. They companies claim this will result in dramatic savings that will ultimately help the automakers reestablish viability. The dealers disagree, and I can see why.

It is the dealer that pays for inventory and the shipping of that inventory, fronts the costs of any warranty work, and purchases repair equipment and parts. What is particularly galling is the treatment these individuals – many of whom are being closed on arbitrary basis, through no fault of their own - have faced at the hands of their former ‘partners’. These are loyal and, in many instances, longstanding franchises being summarily jettisoned – not to mention some of our nation’s most significant small businesses in communities across America – yet the automakers have provided no clarity with respect to exactly how and why they have come to the specific decisions they have made.

Moreover, the companies aren’t providing any significant assistance in “winding down”. Chrysler is giving their dealers three weeks. Three weeks to clear inventory that includes, I might add, additional vehicles that Chrysler itself petitioned dealers to buy in order to keep it out bankruptcy not even a year ago! And General Motors states, for example, in its “Wind-Down Agreement” that they will not be paying to “buy back” tools or parts from the dealerships they are closing.

So what exactly is the rationale for shuttering a dealership like the one in Sebago Lake, Maine that had one of the most thoroughly trained workforces, and highest customer service indexes, in the state? According to a letter from General Motors, they could no longer maintain a ‘productive business relationship’. Why? This is a business that has been a partner to GM for over eighty years, serves an area of over 100,000 people and sells over $2 million annually in parts alone. And how is it that cutting four Chrysler dealerships and at least a dozen GM franchises in my state where over fifty percent of registered vehicles are bought from those two companies is going to help those companies to reemerge from bankruptcy and reestablish viability?

The sad fact is the American taxpayer is solely responsible for keeping these companies afloat. Without the $70 billion of government funds, Chrysler and GM would be out of business, and likely experiencing a painful liquidation that would decimate the country’s already fragile economy. We must act swiftly, and we must send a message to the Administration and to the companies involved that our fellow Americans will not be treated in such a dismissive and arrogant fashion. The American taxpayer deserves answers and the dealers and their employees deserve far better.


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