July 9, 2009

Auto dealers intend to fight for survival

U.S. auto dealers praised a House initiative that would mean life support to more than 3,000 businesses cut out of the picture by bankrupt automakers.

General Motors Corp. intends to cut 1,300 dealerships, while Chrysler has already closed 789 retail outlets. In addition, GM expects about 1,200 dealerships to exit the business on their own.

Both companies have had their plans approved in bankruptcy court from which Chrysler emerged with a sale of its assets to Fiat.

That did not end the debate, however. The Automobile Dealer Economic Rights Restoration Act, sponsored by Rep. Daniel Maffei, D-N.Y., now has 202 cosponsors, The Detroit News reported Thursday.

A Senate version of the bill has 14 sponsors.

In a statement, dealerships praising the lawmakers' efforts said closing 3,000 dealerships is a flawed business plan (that) will lead to the direct loss of more than 169,000 good jobs and cripple the U.S. auto industry.

More than 100 dealership owners will converge on Capitol Hill Tuesday to urge lawmakers to pass the bill quickly.

In response, Chrysler and GM executives met with members of the administration's automotive task force and House Majority Leader Steny Hoyer to find alternatives to the proposed bill, the newspaper said.