U.S. House Approves Bill to Reverse Chrysler, GM Dealership Cuts

Joshua Duval

The U.S. House of Representatives has approved legislation that would reverse dealership cuts made by Chrysler and General Motors as part of their restructuring efforts.

"If Congress reverses this process, it flies in the face of a U.S. vehicle market that has declined 40 percent since 2007," said Chrysler Vice President Peter Grady in a statement on the automaker's blog.

As part of its bankruptcy proceedings, Chrysler shut down 789 dealerships, giving them just weeks to offload their inventories--a move that angered many dealers and has drawn much of the lawmakers' criticism. Rather than close its dealerships outright, GM forewarned about 1300 dealers that it would not renew their franchise agreements when they expire in October 2010.

The legislation would undo the dealer eliminations made by the two automakers and force them to fight for the cuts in state courts, a process that could prove costly and time-consuming for the companies. The House approved the measure 219 votes to 208, as part of a $24.2-billion spending bill for the fiscal year starting October 1.

The bill must now make it through the Senate, where its fate is uncertain. The Obama administration said yesterday it strongly opposes the legislation because the dealer closings were necessary steps in the automakers' government-financed restructuring processes.

Source: Automotive News

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