Congress Highlights Need to Slow Down Dealership Closings, Layoffs

NADA Asks Congress, Obama, Automakers to Reexamine Dealership Decision

WASHINGTON--(BUSINESS WIRE)--In response to today’s congressional oversight hearing examining the reckless and disorganized closure of thousands of neighborhood auto dealerships and tens of thousands of additional jobs which will be lost as a result, the National Automobile Dealers Association (NADA) issued the following statement in support of today’s action:

“Dealerships equal revenue to manufacturers, not costs. The franchised-dealer network was created to outsource virtually 100 percent of the cost associated with selling and servicing cars. A rapid reduction in dealer numbers would further cut manufacturer revenue and market share and do nothing to improve the manufacturer’s viability.”

“Congress rightfully called today’s hearing to expose the unnecessary and reckless closure of thousands of auto dealerships and the loss of tens of thousands of jobs caused by Chrysler’s and General Motors’ short-sighted restructuring plans.

“Dealerships equal revenue to manufacturers, not costs. The franchised-dealer network was created to outsource virtually 100 percent of the cost associated with selling and servicing cars. A rapid reduction in dealer numbers would further cut manufacturer revenue and market share and do nothing to improve the manufacturer’s viability.

“Furthermore, these forced closings will cause a ripple effect through the economy that will make the nation’s overall recovery substantially more difficult. The dealerships being shuttered represent more than 100,000 jobs as well as billions of dollars in sales tax revenues for the towns, cities and states.

“It is reckless for Chrysler, with the approval of the auto task force, to shut down almost 800 dealerships with barely more than three weeks notice and then refuse to buy back vehicle and parts inventories. Forcing these dealers to liquidate their vehicle inventory and parts supplies before June 10, and requiring them to lay off their employees in a careless and disorderly manner will cause additional economic harm both locally and nationally.

“Due to the timing and unprecedented terms of these terminations and the fact that there is no method for dealerships to appeal this non-transparent decision, NADA calls on the Obama administration and these automakers to ensure that these dealerships and the people who work there have enough time to properly close their businesses and find new jobs. The President should review options such as having Chrysler buy back the parts, inventory and manufacturer-specific tools.”

[Editor’s Note: Click here for the state-by-state breakdown of dealerships and jobs lost due to this action by Chrysler. GM did not release a list of the 1,100 dealerships it intends to close. NADA stated that GM’s drastic and far-reaching plans to cut its dealer network will impact more than 63,000 dealership employees and thousands of GM sales and service customers.]