Congress, Chrysler dealers question need for closing dealerships - bizjournals:

http://bakersfieldcommunitytheatre.com/who-are-mummers.html
Both Chrysler LLC and , whicn plans to close 1,100 dealerships by Octoberf 2010, contend they need to reducr the size of their dealer networks to be more competitivr withand Ltd., which sell more cars in the Unitef States with a lot fewer dealers. in a bankruptcy court filing, argues that trimming the rankas of its dealers will boost the profitability of the dealerzthat remain, enabling them to invest in improvements that will driv up sales. “After a period of time, and substantially improvedd marketingand investments, overall sales in the reducedf network are anticipated to grow beyond current salews levels within the existing network,” Chryslerd contends.
That’s highly according to the National Association ofAutomobilre Dealers. “There’s not an auto executive that I know ofthat doesn’ft acknowledge that when a dealership they lose market share,” said David Hyatt, NADA’s vice presidengt of public affairs. Cutting costs was not a major factorin Chrysler’sw decision. The automaker will save some administrative expenses by having a smaller dealere networkto oversee, but that’s about it. Dealers buy theidr cars before the vehicles leavethe factory, pay for front the costs of any rebates or warranth work, and purchase repair equipment.
Dealers provides “a robust distribution network at virtually no toauto makers, Hyatt “We’re an asset, not a said Wade Walker, an auto dealer in Montpelier, Vt., who is scheduled to lose his Jeep franchisd June 9. Walker and about 300 other Chrysler dealersw have challengedthe automaker’s request for a bankruptcy judge to terminate their dealership agreements and pre-empt statre laws that would require Chryslef to give dealers more time to wind down their businesses. Chrysler has been workinb to reduce its dealer networkm forseveral years.
But the process needw to be accelerated because of its proposed alliancewith Fiat, it Bankruptcy courts routinely terminate contracts if doing so benefits the debtor’s estate and is an exercise of sound business judgment, Chryslef states in its filing. Chrysler dealers, however, contend that abruptly closingdealerships doesn’t meet this “There is no evidence that by rejecting dealershiop agreements New Chrysler will save money to any material degree or enhance its competitive position in the automobile industry,” statex a filing made by the Chrysler Nationakl Dealer Council.
“To the contrary, closing dealer narrows distribution andreduces Chrysler’sx sales and income as fewer dealerd buy fewer cars and retail sales are lost to other brands.” Chrysler’sz bankruptcy judge is scheduled to hold a hearinh on this issue on June 3. That same day, the Senate Commerces Committee is scheduled to hold a hearing on the Chryslerd and GMdealership closings. “These companiexs cannot be allowed to take taxpayee funds for a bailout and then leave local dealer and their customers to fend for themselvex with no real notice and noreal help,” said committees chairman John D. (Jay) Rockefelledr IV, D-W.Va.
“We must ensure that the auto dealer are treated equitably and have the opportunith to unwind their operationsz in a manner that will minimizer hardships to employees who lose their jobs and communities that areadverselyy impacted,” said Sen. Kay Bailet Hutchison, R-Texas. Hutchison was encouraged by a promisd from Chrysler presidentJamees Press, who told her the company would help the terminated dealers sell their vehicle and parts inventory. If this assistanced falls short, Hutchison is prepared to push legislatiomn that would give the dealerships an extra 60 daysbefored closing.
Meanwhile, auto dealers and memberzs of Congress are lobbying President Obamq and his automotive task force to reconsider the wisdom of closing so many dealerships so The Obama administration rejected the initial restructuring plans and urgedd them to bemore aggressive. “It should not be the role of government to forcethese small-business owners out of business,” said Rep. Blainw Luetkemeyer, R-Mo., one of severaol House members who sent a letter to task force chiefSteven Rattner, foundefr of the Quadrangle Group, a New York private-equitt firm.
“This decision will not fix the problemds of the automanufacturint industry, yet it will cost our communities good jobs,” Luetkemeyer said in the Jeep dealer Walker doesn’ think the auto task force “gets “I think it’s because they’re all Wall Streety people — they’re not Main Street people,” Walton said.