Washington -- A majority of House members have signed onto a bill to reverse the closing of 789 Chrysler dealerships and block General Motors Corp. from closing more than 1,300, while the full House could vote on the bill as early as next week.
The Automobile Dealer Economic Rights Restoration Act of 2009, sponsored by Rep. Daniel Maffei, D-N.Y., now has 221 cosponsors -- a majority of the 435-member House. GM's executives met with Maffei this week.
On Wednesday, the bill had just 202 cosponsors. Late Tuesday, the House Appropriations Committee approved by a voice vote an amendment that also seeks to reverse the dealer closings.
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GM's vice president for sales, service and marketing, Mark LaNeve, said he and his boss, GM North American President Troy Clarke, met with more than 20 members of Congress over the last two days. LaNeve said GM, in the second quarter of 2010, will take another look at its closing dealers to reconsider some if the market or GM's sales improve.
"This has been the most difficult, hard thing I'd every have to do," LaNeve said. "In terms of creating a viable, competitive GM on taxpayer dollars, you can't look in the mirror and say we didn't have to restructure the dealer body."
The bill would require GM and Chrysler to "honor those rights ... prior to the commencement of the bankruptcy cases of each corporation, including dealer rights to recourse under state law." Chrysler's 789 dealers, nearly a quarter of its network, closed in early June.
GM sent termination notices to about 1,300 dealers and expects another 1,280 to close voluntarily by the end of 2010. GM is giving closing dealers 16 months to sell their inventory and up to $1 million in wind-down payments and has agreed to hear appeals. It has reversed its closing decisions in at least 70 instances, LaNeve said -- saying the decisions were driven by data or "extraordinary circumstances." "We didn't reverse anybody because they said they would do better in the future," LaNeve said.
Chrysler offered no appeal process and no money to closing dealers. It gave dealers just 26 days to close their doors.
On Thursday, Chrysler defended its actions, saying it had "used sound business judgment during the bankruptcy process to determine the appropriate size for its dealer network. Annual new vehicle sales have declined roughly 40 percent in the last two years, which leaves Chrysler at a level that cannot support the previous size dealer network."
But Chrysler said it is still talking to its former dealers.
"Chrysler continues to work with discontinued dealers on issues related to redistribution of inventory, parts and special tools," the company said. The closings, it said, were "tough, painful business decisions to be made, including reducing the number of manufacturing facilities, employees and dealers. These decisions were not taken lightly, nor were they made irrationally."
Chrysler said the bill with 222 supporters "would jeopardize the viability of the new company."
Rep. Gary Peters, D-Bloomfield Township, is circulating a letter trying to broker a compromise.
"Those of us from states that have a significant auto presence have always understood that auto restructuring will only be possible through shared sacrifice among all stakeholders," Peters wrote. "We fully support efforts to provide assistance to automobile dealerships whose franchise agreements are being shed as part of the bankruptcy process. The owners and employees of the dealerships affected by this decision were not responsible for the financial crisis that has necessitated automobile restructuring, and neither are the thousands of hourly and salaried workers who are being laid off, the retirees whose benefits are going to be cut or the auto parts suppliers who are going out of business."
An ad-hoc committee of auto dealers -- co-chaired by Jack Fitzgerald, owner of Fitzgerald Auto Malls in Maryland, Pennsylvania and Florida; Alan Spitzer, president of Spitzer Management Inc. with dealerships in Ohio, Pennsylvania and Florida; and Tammy Darvish, vice president of DARCARS in Maryland -- issued a statement praising the legislation.
"A majority of the U.S. House of Representatives, an astonishing 222 members, and a quickly growing number in the Senate, from both parties, now fully recognize what is clear to the American people: The leadership of GM and Chrysler made a horrible mistake by their arbitrary termination of profitable dealerships," the statement said. "Detroit and the (White House's) auto task force's flawed business plan will lead to the direct loss of more than 169,000 good jobs and cripple the U.S. auto industry's ability to come back from bankruptcy."
A Senate version sponsored by Sen. Charles Grassley, R-Iowa, has 14 cosponsors, including Edward Kennedy, D-Mass.; Tom Harkin, D-Iowa; and Robert Bennett, R-Utah.
More than 100 auto dealers from across the country will join with senior members of Congress on Tuesday July 14 on Capitol Hill to make their case for immediate passage of the bill.
Clarke and LaNeve, will meet with Senate aides this afternoon after a day of meetings Wednesday.
Chrysler Deputy CEO Jim Press also has been meeting with key officials on the Hill.
Two top White House auto advisors, Steve Rattner and Brian Deese, met with House Majority Leader Steny Hoyer and GM and Chrysler executives for nearly 90 minutes Wednesday in an effort to reach a deal to head off legislation.
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