July 22, 2009

Chrysler: Dealer bill could be final straw

Chrysler Group LLC might have to liquidate if Congress reverses the U.S. automaker's planned closings of 789 dealerships, an executive said Wednesday.

The legislation, which the House approved last week, would simply take Chrysler back to the future but without the same options for survival it had this spring, Vice President and Associate General Counsel Louann Van Der Wiele told a House Judiciary subcommittee.

Complete liquidation, with all of its dire consequences, could follow, she said.

Van Der Viele said the deal that sold Chrysler's good assets to Italian automaker Fiat SpA last month could unravel if the auto dealerships were restored, The New York Times reported.

The rest of the company, now known as Old Carco, remains in bankruptcy protection and will be sold off in pieces.

Committee members from both parties demanded Van Der Viele and Michael Robinson, General Motors Co. North American vice president and general counsel, explain how the dealership cuts will lead to more profits.

Rep. Bradley Sherman, D-Calif., said even if fewer dealerships did lead to higher profits, it would mean consumers were paying more for their vehicles, the Times said.