Senate reviews closing of GM, Chrysler dealerships

WASHINGTON -- Top executives from General Motors and Chrysler will face tough questions from lawmakers about sweeping plans to close hundreds of car dealerships as the auto companies undergo government-led bankruptcies.

The executives will appear before a Senate committee Wednesday to talk about their dealership plans.

Lawmakers contend the dealership closings will put thousands of people out of work and offer few savings to GM or Chrysler, which have received billions in federal aid as they attempt to restructure and return to profitability.

Chrysler has identified 789 dealerships that it plans to close next week, about a quarter of the company's dealership network. The automaker's plan has drawn fire from lawmakers because dealers received only three weeks' notice.

General Motors told 1,100 dealerships that it does not plan to renew their franchise agreements in late 2010 and expects to shed another 900 dealerships through attrition and by selling or discontinuing its Hummer, Pontiac, Saab and Saturn brands.

"The egregious time frame and terms of these franchise terminations seem unprecedented to me," wrote Sen. Jay Rockefeller, D-W.Va., who chairs the Senate Commerce Committee, which will hold the hearing.

GM Chief Executive Fritz Henderson and Chrysler Vice Chairman and President Jim Press were to testify before the committee along with several dealers being forced to close. Car dealers are a potent political force, contributing more than $9 million to federal candidates for the 2008 elections.

GM and Chrysler have said the dealership reductions are a painful part of their restructuring, which also has required concessions from union workers and bondholders. Seeking to address the concerns, Troy Clarke, president of GM's North American operations, and Press met with committee members before the hearing.

Discontinued Chrysler dealerships have resold or redistributed about 90% of their vehicle inventory and parts through a company program, spokeswoman Lisa Barrow said. GM's plan was designed to help dealerships slowly wind down their businesses.