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Dumped GM, Chrysler Dealers Not Going Away Quietly

Lobbyists put pressure on Congress, West Virginia goes to court

By Mark Huffman
ConsumerAffairs.com

June 3, 2009

In Washington, GM’s CEO and his Chrysler counterpart Jim Press are going before the Senate Commerce Committee today to explain to lawmakers exactly why closing a combined 2,400 dealerships nationwide makes economic sense.

The dealers and their lobbyists in Washington says pulling the plug on so many dealers adds to the nation’s unemployment problem, hitting many communities that are losing multiple dealerships especially hard. Industry estimates that as many as 100,000 people -- from sales representatives to mechanics, will be thrown out of work.

In a letter to Congress last month, Press promised Chrysler would help the closed dealerships beyond the deadline it previously imposed. Chrysler plans to shutter about 25 percent of its dealerships by next week.

At least one state is intervening on behalf of its car dealers.

Late last month West Virginia Attorney General Darrell McGraw filed an objection with the United States Bankruptcy Court in the Southern District of New York against Chrysler’s proposed termination of 17 Chrysler dealerships in West Virginia. If Chrysler’s request to terminate these dealerships is approved by the bankruptcy court, McGraw says only seven Chrysler dealerships will remain in his state.

In his filing, McGraw asked the bankruptcy court to consider the hardship the termination of the dealers will impose on West Virginians because they will have to drive further to service their vehicles under the manufacturer’s warranty. McGraw also objected to the procedures for terminating the dealerships because the process was arbitrarily in violation of West Virginia law.

"Termination of the Chrysler dealerships in West Virginia will cause untold harm to dealers and consumers alike," said McGraw. "Dealers are Chrysler’s primary customers. It simply does not make sense to terminate your customers when you are trying to sell more cars."

The bankruptcy court is scheduled to hear Chrysler’s request and multiple objections on today in New York. If approved, these dealerships could close as early as June 9.

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