GM, Chrysler agree to reconsider dealer closings
The plans call for face-to-face reviews with dealerships and offer binding arbitration with those who face closure of their showrooms.
By Agencies |
WASHINGTON: General Motors and Chrysler will reconsider decisions to close thousands of dealerships as part of a compromise meant to stave off federal legislation that would require them to keep showrooms open.
The decision by the two automakers, announced on Thursday, raises the prospect of new life for some of the more than 3,000 dealerships that were slated to close. The shutdowns are part of a broad industry restructuring. Dealers have loudly protested the decisions, saying they are unfair.
The plans call for face-to-face reviews with dealerships and offer binding arbitration with those who face closure of their showrooms. The largest U.S. automaker also said it would be more transparent about how it picked the dealers that will close. It will also speed up payments to assist those targeted for shutdown.
As part of its deep restructuring this year, GM has said it will cut 2,400 dealers from its 6,000-dealer network by next fall. Chrysler announced similar plans, slashing 789 dealers as part of its bankruptcy proceedings this summer. Both automakers say the cuts are needed to better align their dealer network with much lower demand for cars and trucks.
But dealers accused the automakers of closing lots that were still profitable, and said the auto companies weren't forthcoming about the criteria they used to decide who will close and who stay open.
The House passed legislation in July that would force the companies to reverse their closure plans, though the Senate has not taken it up. The Obama administration opposes the measure.
Talks brokered by Congress between the dealer groups and the automakers began in September, but had stalled over disagreements over factors like the review process for dealers slated to close.
Lawmakers have warned that if an agreement isn't reached, legislation would move forward to deal with the closures. Most of the Senate Commerce Committee wrote a letter two weeks ago to Chrysler and GM seeking more information about the talks and warning that dealers should be treated fairly.
The federal government holds a majority stake of GM and 10 percent of Chrysler.
The decision by the two automakers, announced on Thursday, raises the prospect of new life for some of the more than 3,000 dealerships that were slated to close. The shutdowns are part of a broad industry restructuring. Dealers have loudly protested the decisions, saying they are unfair.
The plans call for face-to-face reviews with dealerships and offer binding arbitration with those who face closure of their showrooms. The largest U.S. automaker also said it would be more transparent about how it picked the dealers that will close. It will also speed up payments to assist those targeted for shutdown.
As part of its deep restructuring this year, GM has said it will cut 2,400 dealers from its 6,000-dealer network by next fall. Chrysler announced similar plans, slashing 789 dealers as part of its bankruptcy proceedings this summer. Both automakers say the cuts are needed to better align their dealer network with much lower demand for cars and trucks.
But dealers accused the automakers of closing lots that were still profitable, and said the auto companies weren't forthcoming about the criteria they used to decide who will close and who stay open.
The House passed legislation in July that would force the companies to reverse their closure plans, though the Senate has not taken it up. The Obama administration opposes the measure.
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Talks brokered by Congress between the dealer groups and the automakers began in September, but had stalled over disagreements over factors like the review process for dealers slated to close.
Lawmakers have warned that if an agreement isn't reached, legislation would move forward to deal with the closures. Most of the Senate Commerce Committee wrote a letter two weeks ago to Chrysler and GM seeking more information about the talks and warning that dealers should be treated fairly.
The federal government holds a majority stake of GM and 10 percent of Chrysler.
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