Democrats Up Efforts to Spare GM, Chrysler Dealers

Posted June 9, 2009 at 6:55pm

Updated: 8:05 p.m.

Lawmakers concerned about car dealerships being forced to close amid General Motors and Chrysler restructuring moved fast this week to shine the spotlight on the matter — and seem to have gotten the attention they wanted.

The House Energy and Commerce Subcommittee on Oversight and Investigations announced Tuesday that it will hold a hearing on Friday to weigh the recent auto dealership closures announced by Chrysler and GM, both of which are in the throes of government-structured bankruptcies. Chrysler plans to close 789 dealerships this week; GM wants to nix about 2,500 of its 6,000 dealerships by the end of next year.

Chairman Bart Stupak (D-Mich.) said the subpanel will hear from Chrysler and GM executives on the criteria used for determining which dealerships will close and what options are being offered to dealerships slated for closure.

News of the hearing comes a day after nearly 100 Democrats — including House Majority Leader Steny Hoyer (Md.) and Democratic Congressional Campaign Committee Chairman Chris Van Hollen (Md.) — sent a letter to President Barack Obama urging him to keep profitable car dealerships in business as GM and Chrysler enter bankruptcy under the guidance of the Obama’s auto task force.

Hoyer and Van Hollen will also take part in a Wednesday news event to highlight legislation aimed at stopping the forced closure of dealerships. Both are cosponsors of the bill, introduced Monday by freshman Rep. Dan Maffei (D-N.Y.).

Lawmakers will have to scramble to counter a Tuesday afternoon ruling by a bankruptcy judge giving Chrysler the green light to terminate the franchises of 789 of its dealers.

U.S. Judge Arthur Gonzalez ruled that the franchises can no longer act as authorized Chrysler dealers, effective immediately. Chrysler has said it needs to reduce its dealer ranks by about 25 percent to cut costs; dealers maintain that their existence doesn’t translate to substantial costs for the automaker.