GM closes 500 dealerships in face of congressional objections
Twenty-two House members, including Republican Minority Leader John Boehner of Ohio, asked for a suspension of the terminations until the completion of a federal investigation into possible misconduct during the dealer cuts.
Sen. Sherrod Brown, an Ohio Democrat, also asked for a halt in the closures until courts can rule on dealer appeals of arbitration decisions.
GM spokeswoman Ryndee Carney said today that all existing dealer sales and service agreements expired Oct. 31. Dealerships continuing with the automaker have new five-year agreements that became effective today, she said.
A suspension of the terminations “would only divert our collective attention at a critical time and would ignore the independent decisions of arbitrators and individual settlement agreements between GM and its dealers,” Carney said, echoing the automaker's earlier statements.
While skidding toward bankruptcy in spring of 2009, GM had tagged the 500 stores for elimination by Oct. 31. These dealerships had 1,233 franchises that were terminated yesterday, Carney said.
They constituted the majority of the 2,039 dealer franchises marked for elimination during GM's bankruptcy.
The 806 other franchises that were being wound down were instead restored to dealers during and after arbitration, Carney said.
'No logic' to shutdowns
Rep. Steven LaTourette, an Ohio Republican who organized the congressional effort, said today that “there is no logic or necessity to shut down these dealers while an investigation is ongoing.”
He argued that terminated dealerships would have a difficult time reopening if they were found by investigators to be victims of illegal misconduct by automakers or the Obama administration.
The special inspector general of the U.S. Troubled Asset Relief Program is investigating the closure of more than 2,000 GM and Chrysler dealerships during and after the companies' bankruptcies last year.
A July audit by the inspector general, former federal prosecutor Neil Barofsky, criticized the way the terminations were handled by the administration and the automakers.
In addition, a handful of terminated GM and Chrysler stores are challenging their arbitration decisions in federal court.