"I am the face of GM and Chrysler in my town," said Peter Lopez, a Spencer, W.Va., dealer unlucky enough to be selling the brands of both fallen automakers.
Russell Whatley, a Chrysler-Dodge-Jeep dealer in Mineral Wells, Texas, said his grandfather opened the business in 1919. "A 90-year investment is just gone," he said. He called Chrysler's actions "wasteful and devastating."
Lawmakers expressed sympathy for the dealers and some impatience with the automakers. But retrenchment is inevitable as taxpayer-supported GM and Chrysler fight to stay afloat once they emerge from bankruptcy protection.
Chrysler President James Press told the hearing of the Senate Commerce Committee his company was "working hard to achieve a soft landing" for dealers. But if underperforming dealers aren't selling cars, the company can't return to profitability, he said.
"I think `soft landing' is wishful thinking," Sen. Frank Lautenberg, D-N.J., said as committee members channeled a multitude of complaints from homestate dealers spurned by GM and Chrysler.
Committee Chairman Jay Rockefeller, D-W.Va., suggested both companies were abandoning customers and dealers.
"I don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real plan, no real notice and no real help," Rockefeller told the automakers. "That is just plain wrong."
Those dealers "are looking into a black hole right now," while companies seem to be implying "that the dealers themselves are responsible for the companies' problems," Rockefeller said.
Henderson told the committee that 500 dealers had appealed GM's decision to sever ties. As of now, GM has reversed itself on 11 of them, he said. More than 2,700 dealerships are in line to lose their franchises.
"It's unbelievable how we have been treated." Lopez said. He said he had met every financial obligation put forth by Chrysler and GM but still "they want to shut me down."
The auto executives said there are too many dealers, with many representing the same company often competing with each other for sales. Many dealerships date to the 1940s and 1950s, when motorists lived farther apart and Detroit automakers led the world in sales, they said.
After hemorrhaging customers for decades and losing market share to foreign competitors, the two automakers said their companies need to scale back all their operations to become leaner and return to profitability.
Chrysler is expected to emerge from bankruptcy protection within the next few days. GM filed for Chapter 11 protection on Monday and its officials said they hope to be able to emerge as a new company in 60-90 days.
To save money, GM, perennially one of the biggest spenders in Washington on lobbying, said it has terminated contracts with a dozen lobbying firms it has used to help make its case in Washington. The company reported spending $2.8 million on lobbying for the first three months of 2009, $500,000 of which went to outside lobbying firms, according to the nonpartisan Center for Responsive Politics.
GM spokesman Kerry Christopher said the company would retain its in-house lobbyists, who work on health care, tax, trade, safety, environmental and other issues.
A GM statement also said the company's political committee stopped making campaign contributions to federal candidates in January and plans to continue the freeze all year.
Lawmakers argued that the dealership closings will put thousands of people out of work and offer few savings to GM or Chrysler, which have received billions of dollars in federal aid. The industry, in response, says taxpayers' investment is best protected by shedding unprofitable operations and strengthening the bottom line as fast as possible.
"It's not our place to change your decision," Sen. Kay Bailey Hutchison, R-Texas, told the auto executives. "But it is our place ... to make sure that everyone is treated as well as can be in these circumstances."
Chrysler has identified 789 dealerships it plans to close next week, about a quarter of the company's dealership network. Dealers received only three weeks' notice.
General Motors told 1,100 dealerships it does not plan to renew their franchise agreements in late 2010 and expects to shed an additional 900 dealerships through attrition and by selling or discontinuing its Hummer, Pontiac, Saab and Saturn brands.
Chrysler says its departing dealerships have resold or redistributed about 90 percent of their inventory and parts through a company program. But dealers being let go want the Obama administration to give them more time.
"We have an eight-month supply of vehicles and only three weeks to clear them out," Whatley told the committee.
GM said the dealers it's not renewing are being given until October 2010 to close.
Meanwhile, a group of Republicans distressed by the Obama administration's temporary nationalization of GM is proposing that congressional approval be required before money from the Troubled Asset Relief Program is used to buy a stake in a company.
The lawmakers complained that Congress had no opportunity to review the Obama administration's decision to take a 60 percent ownership of GM.
"General Motors needed a real bankruptcy, not a political bankruptcy," said Sen. Jim DeMint, R-S.C.
"We end up owning 60 percent of the stock and not a single vote was cast on that plan," said Sen. Mike Johanns, R-Neb. Johanns said the amendment, which they hope to consider Thursday, would apply to any money provided after May 29.
The third Detroit automaker, Ford Motor Corp., has not filed for bankruptcy protection and has not taken any federal bailout money. It has also not announced widespread dealership closings.
Car dealers are a potent political force, contributing more than $9 million to federal candidates for the 2008 elections.
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