Shuttered Car Dealers Voice Rage, Anguish

June 12, 2009 -- House lawmakers put executives from General Motors and Chrysler in the hot seat today as they questioned the wisdom of closing auto dealerships around the country.

"Since American taxpayers now own 60 percent of General Motors," Rep. Greg Walden, R-Ore., said, "we have a right to know just how the decisions affecting our constituents are made."

GM and Chrysler are shedding dealers as they enter bankruptcy and emerge as new companies. This week, 789 Chrysler dealers were shuttered, and a similar fate looms for 1,350 General Motors dealers before the close of next year.

The House Subcommittee on Oversight and Investigations pushed for answers from the same executives who testified to a Senate committee last week.

"1-800-CAR-TSAR? What number do I need to call to help the dealers that have been so badly hurt?" Rep. Mike Burgess, R-Texas, asked of the auto executives. "Just tell me the telephone number I call?"

Chrysler Deputy CEO Jim Press testified that the cuts "were the most difficult business action" of his career; he also blamed them on dealers, saying, "Eighty percent of them were below their minimum sales responsibility, which translated into 55,000 lost sales, $1.5 billion in lost revenue."

The endangered dealers expressed anger, frustration, disbelief and some nearly were in tears.

Daniel Keikenapp, a Dodge dealer from Tacoma , Wash., told the subcommittee his dealership had been valued at several million dollars, employed 71 people, had been ranked No.1 in Western Washington by Chrysler, but now was "being turned into a used car lot and neighborhood repair facility."

The impact would be felt in his community, he said.

"Thirty-five faithful and loyal, long-term employees have lost their jobs, and Pierce County and the state of Washington have lost a payroll of approximately $1.3 million per year," he added.

"The sacrifices -- all painful -- that we are all making," said General Motors CEO Fritz Henderson, "are necessary to put GM on a brighter path to long-term viability and success. We owe this to the U.S. taxpayer."

General Motors released a list to the committee showing how many dealers will be cut in each state. Pennsylvania leads the count at 90. The other big losses are in California, with 65 closings, Illinois, with 66, Michigan, with 58, New York, with 60 and Ohio, with 79.

"How does it help the manufacturer to close profitable dealerships?" Rep. Diana DeGette, D-Colo., asked. "In my home state, 14 profitable dealers will be closed."

Robert Thomas runs a family business that has sold GM cars since 1918 in Bend, Ore., where he says they enjoy "iconic status." He was proud that his "family had woven itself into the social fabric of the community since the time it was a village."

He was incredulous as he said, "Having no GM dealer in our town of 80,000 will not increase GM sales."

Rep. Bart Stupak, D-Mich., chairing the hearing, expressed concern about the rural communities.

"In my vast rural district, if a dealer closes down, it can mean a 2-hour drive for you to reach the next closest dealer," he said. "This will cause added expense and hardship for my constituents."

Frank A. Blakenbeckler III, from Waxahachie, Texas, owns the oldest Chevrolet dealership in the state of Texas, operating since 1926, when it was founded by his maternal grandfather.

He choked back tears as he told the committee, "It took me nearly 20 years to pay my parents for Carlisle Chevrolet. It took GM and Chrysler a mere 24 hours to steal Carlisle Chevrolet from me. This makes no sense. Why is this happening?"

Blankenbeckler's pain was palpable in the hearing room as he continued, "I am hurt. I feel violated. I am extremely angry. I wear my father's Bronze Star lapel pin on my coat. He was a member of the greatest generation. I am glad he is not alive to witness this travesty."

James Golick, one of 789 terminated Chrysler dealers, was outright feisty to the auto dealers sitting at his table. He challenged their decision-making and quoted statistics back to them.

"When we are gone, they'll lose 140,000 units in annual sales and the factory will lose $4 billion annually," he said. "No wonder they are losing money!"

Golick took offense at the manner in which he lost his dealership in suburban Pittsburgh.

"One would never think that we could see the day when someone could just take your business from you in the United States of America, but this very day is now upon us," he said. "Why can't we let the free market decide which dealers survive or fail?"

It is estimated that 100 to 120,000 jobs are at risk. Many of those employees will have to find work outside the auto sector.

"It's not just economic principles," Rep. Bruce Braley, D-Iowa, told the auto executives. "You are talking impact about people's lives in every congressional district in this country. ... That is why it matters to me and to my colleagues on both sides of the aisle."

General Motors is hearing appeals from 856 dealers on its decision, and told the committee that it has reversed 45 severance letters.