U.S. House okays measure to restore car dealerships
WASHINGTON–The U.S. House of Representatives broke with the Obama administration yesterday over a key part of the auto industry restructuring, pressing General Motors and Chrysler to restore car dealerships shuttered by the car companies' bankruptcies.
The House approved the car dealer measure as part of a spending bill. It would force General Motors Co. and Chrysler Group LLC to restore franchise agreements with dealers as a condition of partial government ownership.
Dealers have argued the government and the automakers have trampled over state franchise laws. They warn that up to 200,000 workers could lose their jobs.
GM is reducing its 6,000-dealer network by more than 2,000. Chrysler cut 789 of its dealers as part of its restructuring plan.
The cuts were part of the GM and Chrysler bankruptcy agreements that left the U.S. government with a 61 per cent ownership stake in GM and 8 per cent of Chrysler.
GM and Chrysler have fought the legislation, saying it will slow down their turnaround plans and hurt their work to create a more profitable dealer network amid sluggish sales. Peter Grady, a Chrysler vice-president, said the move ``flies in the face" of a declining U.S. vehicle market. "There are simply too many dealers for not enough sales." Representative John Dingell, a Michigan Democrat, said Congress was "playing with fire.''
"If the auto industry goes down because we have taken sides in a quarrel between the auto industry and the dealers, we will have destroyed not only the dealers that complain but all of the other dealers."
WASHINGTON–The U.S. House of Representatives broke with the Obama administration yesterday over a key part of the auto industry restructuring, pressing General Motors and Chrysler to restore car dealerships shuttered by the car companies' bankruptcies.
The House approved the car dealer measure as part of a spending bill. It would force General Motors Co. and Chrysler Group LLC to restore franchise agreements with dealers as a condition of partial government ownership.
Dealers have argued the government and the automakers have trampled over state franchise laws. They warn that up to 200,000 workers could lose their jobs.
GM is reducing its 6,000-dealer network by more than 2,000. Chrysler cut 789 of its dealers as part of its restructuring plan.
The cuts were part of the GM and Chrysler bankruptcy agreements that left the U.S. government with a 61 per cent ownership stake in GM and 8 per cent of Chrysler.
GM and Chrysler have fought the legislation, saying it will slow down their turnaround plans and hurt their work to create a more profitable dealer network amid sluggish sales. Peter Grady, a Chrysler vice-president, said the move ``flies in the face" of a declining U.S. vehicle market. "There are simply too many dealers for not enough sales." Representative John Dingell, a Michigan Democrat, said Congress was "playing with fire.''
"If the auto industry goes down because we have taken sides in a quarrel between the auto industry and the dealers, we will have destroyed not only the dealers that complain but all of the other dealers."
