Behind the Wheel with Phil Lebeau

"The Deal Is Done" For Dealers?


It was a simple, blunt statement from Nebraska Senator Mike Johanns.

In an opening statement before questioning GM CEO Fritz Henderson and Chrysler President Jim Press, Sen. Johanns said, "The deal is done." It was a painfully succinct summary of why thousands of auto dealers upset about losing their affiliations with GM and Chrysler are unlikely to find relief in Washington.

The dealers want Congress to intervene and stop GM and Chrysler from eliminating 789 (Chrysler) and 2500 (GM) dealerships.

As I've said for some time, there's little Congress can do at this point. It's a matter of bankruptcy law, which allows a company under Chapter 11 protection to "kick out" contracts they don't want. Bankruptcy court does not require the company to justify which contracts (dealers) it keeps and which ones it rejects.

Should there be a review process for who stays and who goes? And if so, who makes the ultimate decision? Some Senators want to slow down Chrysler and force it to give dealers at least 60 days before shutting down, instead of just 3 weeks.

The bottom line is one dealers won't like. For decades state franchise laws prevented GM and Chrysler from eliminating stores that, in some cases, were poor performers. Now, GM and Chrysler are taking advantage of bankruptcy law and paring their dealer networks.

Click on Ticker to Track Corporate News:

- Ford Motor

- General Motors

- Toyota Motor

- Nissan

- Honda Motor


Questions?  Comments?