GM, Chrysler defend dealer cuts

— -- General Motors CEO Fritz Henderson and Chrysler President James Press had to defend efforts to trim their dealer networks and other moves before the Senate Commerce Committee on Wednesday.

"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 notice and no real help," said Sen. Jay Rockefeller, D-W.Va., who chairs the committee. "Local auto dealers did not lead GM and Chrysler into financial ruin."

Last month, GM notified about 1,100 dealers that it did not plan to renew their franchises expiring in fall 2010. An additional 200 were notified this week. And on Tuesday, the day after it entered bankruptcy court, GM told remaining dealers they must sign agreements letting GM terminate their contracts more easily — or be forced to close.

"They are taking advantage of the fact they are in bankruptcy to change (franchise agreements) and make them much more unilateral," says National Automobile Dealers Association Chairman John McEleney, who is also a GM dealer. "It's a total overreach."

If Chrysler bankruptcy Judge Arthur Gonzalez approves Chrysler's dealer plan , the 789 dealers lose their Chrysler, Jeep or Dodge franchises on Tuesday.

GM and Chrysler dealer Pete Lopez of Spencer, W.Va., and Russell Whatley III, a Chrysler-Jeep-Dodge dealer in Mineral Wells, Texas, told the committee of their personal hardships and the effects on their communities. Lopez is losing both franchises. "What's happening today with America's new car dealerships is tragic, and Congress must assert itself," Lopez said.