Senator Byron Dorgan Asks GM, Chrysler To Consider Effects Of Dealership Closings In Rural States Like North Dakota

At hearing requested by Dorgan, questions raised about how dealers and consumers will be impacted

June 3, 2009 -- (WASHINGTON, D.C.) – At a Senate Commerce Committee hearing today, U.S. Senator Byron Dorgan (D-N.D.) questioned the President and CEO of both Chrysler and General Motors about the effects of their dealership closings in North Dakota and their plans to ensure dealerships and consumers are treated fairly.

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James Press, President of Chrysler, and Fritz Henderson, CEO of General Motors, both testified at the hearing, along with John McEleney, Chairman of the National Automobile Dealers Association.

“I understand that both Chrysler and General Motors are undergoing much needed restructuring, but these profitable small businesses incur few operating costs for these corporations and make money for Chrysler and GM by selling their cars,” said Dorgan. “Many of these dealerships have served the auto companies for 60 or 80 years, only to be given three weeks in the case of Chrysler to sell all of their inventory and parts. On top of that, some loyal customers will be forced to travel hours for warranty repairs. I requested this hearing so we can examine the justification for closing these dealerships, and make sure dealerships and consumers are treated fairly.”

Chrysler filed for bankruptcy on May 14, 2009, and told seven dealerships in North Dakota that they must close their Chrysler operations by June 9, 2009, 26 days later. These closings will leave some Chrysler customers having to travel hours to get servicing and repairs, as the dealerships will not be authorized to remain service centers. Many dealers have also expressed concerns that they were encouraged by Chrysler to buy large amounts of inventory in January only to be closed in June, forcing them to sell their cars at a loss.

General Motors has announced plans to close 1,100 dealerships nationwide by October 2010.

Senator Dorgan asked the President and CEO of Chrysler and GM why, if these small businesses are making money and providing services to a loyal rural customer base, are they being told to close by a corporation in bankruptcy?

Senator Dorgan has been in contact with North Dakota auto dealerships in advance of today’s hearing, and gave examples of how some dealerships are being affected by the closings.

• One dealership recently completed a new $5 million showroom just months ago, which was constructed in accordance with to Chrysler specifications, only to be told months later that they would no longer have a franchise to sell their cars.

• Rural owners are concerned that their customers will have to travel for hours to receive warranty work, and Chrysler is not allowing the dealerships they are closing to conduct service work under warranty.

“We need to make sure that closing these dealerships makes sense and is fair not just for Chrysler and General Motors, but also the hard-working small business owners in rural areas who have sold their cars for decades,” added Dorgan. “I know that Chrysler and General Motors are trying to become profitable, but they have an obligation to treat their dealerships and their consumers fairly.”

Source: Senator Byron Dorgan