Washington, DC – Oregon’s Senator Jeff Merkley
announced today that Chrysler has revised its strategy for compensating dealers
that are losing their franchises. Last week, Merkley sent a letter to
Chrysler and GM taking issue with the lack of assistance.
In the letter to Fritz Henderson, CEO of General Motors, and
James Press, President of Chrysler, Merkley expressed his belief that the
market should determine whether or not a dealership closes. Merkley requested
that, if these two companies insist on terminating contracts, the dealerships
be compensated to minimize harm to businesses and communities.
“In Oregon, many dealerships have been in operation for
almost a century and most are family owned. These small businesses have
employed local Oregonians, donated to community little league teams and
organizations, and sold and serviced the vehicles of their neighbors,” wrote
Merkley. “For these small businesses, the orders to close their
dealerships mean the loss of their life’s investments. These dealers now
have little choice and face a difficult and uncertain future.”
The lack of compensation is a particularly acute problem for
Chrysler dealerships that received only three weeks notice to sell off existing
inventory before the contracts are terminated.
Chrysler has now informed Senator Merkley that they have
committed to buying back 100 percent of auto inventory at cost from dealers
being forced to close. While GM is providing an 18-month time-frame for
shuttering dealerships, it is only offering some conditional rental assistance
and no offers to buy back inventory.
“While I would prefer to let market forces determine
which dealerships close and which stay open, Chrysler’s decision to buy back
inventory is an improvement for dealers who are being forced to shut their
doors,” Merkley said. “It isn’t a perfect solution, but hopefully this
agreement will help ease the burden placed on dealers and communities affected
by closings. GM would do well to follow Chrysler’s example and provide
additional compensation for dealers losing their franchises.”
In his letter, Merkley noted that GM and Chrysler were given
billions in taxpayer money – not only to allow those companies to continue to
operate, but to help related industries and workers withstand these difficult
economic times.
An electronic copy of Senator Merkley’s letter to Henderson
and Press is available
here.
An electronic copy of Chrysler’s plan to compensate auto
dealers is available
here.
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