US House panel seeks to protect GM, Chrysler dealers

• Source: xinhua
• [08:18 July 10 2009]
• Comments

Congress will take up the contentious issue of closing auto dealers this month following a House Appropriations Committee's approval of an amendment seeking to overturn a decision by General Motors and Chrysler to close dealers, the Detroit News reported Wednesday.

According to the report, the proposal would force Chrysler and GM to restore franchise agreements that were killed in bankruptcy proceedings or terminated by automakers.

The amendment passed late Tuesday on a voice vote to the financial services spending bill.

Another House proposal to hamstring GM's plans to terminate franchise agreements with nearly 1,400 dealers and seeking to reopen 789 Chrysler dealerships that closed last month has 202 co-sponsors. Among these are House Majority Leader Steny Hoyer and House Financial Services Committee chairman Barney Frank.

GM wants to reduce its nearly 6,100 dealers to between 3,500 and 3,800 by the end of next year. It expects 1,280 dealers will close their doors voluntarily during the period.

GM spokesman Greg Martin said that if the bill passes, it "would put at risk our long-term viability."

"Our restructuring, approved by the court, includes actions across all aspects of our business to become stronger and more competitive," he said.

GM has sought to reduce its dealer network because its market share has fallen from just over 50 percent in the early 1960s to under 20 percent now.

GM and Chrysler have been severely criticized in congressional hearings for their plans to reduce their dealer networks.