WASHINGTON — Under withering criticism in Congress, General Motors and Chrysler executives on Friday called the closings of hundreds of dealerships painful steps needed to right-size the auto giants. Down-on-their-luck dealers said the moves would needlessly devastate their local economies and livelihoods.
“Many dealers and the communities they serve frankly feel blind-sided,” said Rep. Greg Walden, R-Ore.
GM CEO Fritz Henderson told a House panel the dealer cuts were “quite painful” but necessary to save over 200,000 jobs at GM’s remaining dealers.
“In essence, this is our last chance,” Henderson told the House Energy and Commerce Committee’s oversight and investigations subcommittee.
Chrysler Deputy CEO Jim Press said the cuts were part of the shared sacrifices by the United Auto Workers union, bondholders and others needed to avoid liquidation.
“Going through bankruptcy was not our choice,” said Press, who along with Henderson and the other witnesses were required to raise their right hands and testify under oath.
But the committee heard from shutout dealers such as Frank Blankenbecker III of Waxahachie, Texas, whose voice cracked as he recalled the hard work of his father, a World War II veteran, to build their family business.
“I am glad that he is not alive to witness this travesty. To have risked his life for a country that would do what they are doing would destroy him,” he said.
The carmakers’ explanations won few converts from House members, who wagged their fingers at the executives and questioned their motivations. Many of the dealers, they argued, had been profitable and received little warning or opportunity to plead their cases.
“There’s something wrong with a business model that basically says, ‘In order to survive, we’ve got to crush our local dealers,”’ said Rep. Peter Welch, D-Vt.
Rep. Mike Burgess, R-Texas, confronted Henderson about GM’s decision to maintain a parts distribution center in the district of Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee. Frank had urged Henderson to keep the facility open.
“What is the number I need to call? Is it 1-800 Car Czar?” Burgess asked. “I have a nagging suspicion that there is a political calculation.”
The committee released a GM document that, for the first time, provided a state-by-state list of 1,323 dealerships the automaker plans to wind down. Pennsylvania had the most with 90, followed by Ohio with 79, Illinois with 66 and California with 65. Washington was expected to lose 18. Alaska was the only state spared. GM has declined to release the name of individual dealerships.
Chrysler is closing 789 dealerships and GM plans to cut about 1,350 by the end of next year.
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