REPORT: Detroit execs grilled on dealer cuts by Congress, Henderson agrees to cough up closure list

Chris Shunk — Thu, 04 Jun 2009 13:28:00 EST

Filed under: Government/Legal, Chrysler, GM

When it comes to dealership closings, there is a big divide between what General Motors, Chrysler and President Obama's auto task force want and what dealers and Congress want. The bankrupt Detroit automakers say that closing dealerships will save money, streamline vehicle delivery, improve brand image, and improve the health of remaining retail stores.

Some members of Congress aren't so sure that dealer closings will cure much for GM and Chrysler, and the legislative branch brought Chrysler's Jim Press and GM's Fritz Henderson before the Senate Commerce Committee on Wednesday for yet another grilling. Broadly speaking, Congress tends to side with dealers because of the political influence of the dealer body, and because of the impact of dealership job losses in the districts/states that Congressmen and women serve.

According to The Wall Street Journal, committee chairman John D. Rockefeller (D-W. Va.) says that he doesn't "believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves with no real plan, with no real notice, with no real help." Mike Johanns (R-Neb.) added that he is introducing legislation that will force the Obama administration to require congressional approval to use TARP funds to obtain an equity stake in any company.

Press and Henderson told the dealers that they would need to ultimately close 3,400 dealerships. GM has so far announced 1,324 closings by the end of 2010, while Chrysler will shutter 789 retail stores by June 9. Over the course of the congressional proceedings, Automotive News notes that Henderson bowed to pressure to disclose the list of dealers GM is eliminating, although that list has not been made public yet.

Henderson calls bankruptcy "our last chance to get it right, to fix permanently those parts of the business that have diverted us from consistently building winning cars and trucks and the consumer experience to match." Dealers called the closings "hasty," and contend that the actions taken against them won't be nearly as effective as GM and Chrysler expect. Hat tip to Dave!

[Sources: Wall Street Journal; Automotive News - subs. req | Source Photo by Mark Wilson/Getty]

REPORT: Detroit execs grilled on dealer cuts by Congress, Henderson agrees to cough up closure list originally appeared on Autoblog on Thu, 04 Jun 2009 13:28:00 EST. Please see our terms for use of feeds.

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Obama pledges $4b in aid for Detroit automakers

Chris Shunk — Wed, 23 Jul 2008 07:02:00 EST

Filed under: Government/Legal, Chrysler, Ford, GM

After nearly eight years of getting little or no attention from the White House, it seems as though Detroit's automakers will be a major focus the 2008 Election. With the economy looking worse by the day, lawmakers in Washington have been kicking around the idea of a second economic stimulus package to get people shopping again, and Mowtown's lawmakers want in on the money. Michigan's two Democratic senators are attempting to use the prospect of such a bill to include federally-backed loans to help automakers and suppliers build new factories and engineer new models. The $4B would be used to offset the costs associated with the Treasury Department giving automakers $25B in loans at a discounted rate. Automakers have been against such a loan in the past, but with worsening conditions and tighter lending practices the idea is likely to sound much more exciting this time around.

Presumed Democratic Presidential candidate Barack Obama told the UAW in a letter that he supports the $4B in federal aid, stating that he would "provide real solutions necessary to help this industry compete and win in the global economy." Obama also promised tax breaks for consumers that purchase ultra fuel efficient vehicles and tax credits for automakers as well. Presumed Republican nominee John McCain opposes the idea of federally backed loans, but he does support tax breaks to those that purchase fuel efficient vehicles and a $300M in prize money for electric battery powered vehicles

[Source: Detroit Free Press, Image: Bill Pugliano/Getty]

Obama pledges $4b in aid for Detroit automakers originally appeared on Autoblog on Wed, 23 Jul 2008 07:02:00 EST. Please see our terms for use of feeds.

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