Executives from bailed-out General Motors Corp. and Chrysler LLC faced intense congressional heat Wednesday over plans to close about 2,000 dealerships, demonstrating potential complications with the government's direct involvement in the auto industry.
"I honestly don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves," said Senate Commerce Committee Chairman John D. Rockefeller IV, the West Virginia Democrat who convened the hearing.
The standing-room-only crowd also gave weight to suggestions that the Obama administration's decision to take ownership stakes in the companies made members of Congress a rump board of directors.
"If there were any more impetus to try to get back to profitability and try to get the government out of your business ... today's session ought to be that impetus," Virginia Democratic Sen. Mark Warner told GM chief executive Fritz Henderson and Chrysler President James Press.
Several senators said they were uncomfortable with probing the inner workings of manufacturers. But all agreed the pain and job losses the dealer cuts would impose on communities is a tragedy.
"To be arbitrarily closed with no compensation is wasteful and devastating," said Russell Aubrey Whatley III, owner of a Chrysler dealership in Mineral Wells, Texas. "A 90-year investment is just gone and neither my family or my employees have nothing to say about it."
Like other senators, Rockefeller told of calls and e-mails from dealers, complaining about the cuts being exacted by GM and particularly Chrysler, which last month gave 789 dealers less than three weeks to liquidate their inventory and tools before their franchises are terminated Tuesday. Fifteen of those dealerships are in Maryland.
GM is going slower, but its cuts affect many more dealers. The company last month notified 1,100 of its 6,000 dealers it was terminating their franchise agreements by October 2010.
As part of its bankruptcy filing, GM notified most of its dealers this week that they will have to operate under strict new rules or the court could end their franchise agreements. It was unclear how many of the 95 GM dealerships in Maryland would be forced out of business because the company has not offered specifics.
Henderson and Press defended their decisions, saying they were painful ones made so the companies could become profitable.
