tv [untitled] CSPAN June 12, 2009 9:30pm-10:00pm EDT
the reports we rank 32 out of 313 dealers for the sale of dodge vehicles. other reports prepared by chrysler for the area chrysler turned team washington which covers more than a set of washington shows and then in 2006 to, -- tacoma dodge was ranked seven out of 60 dealerships and in 2007 it was ranked eighth that of 41 dealerships and in 2000 aid to our worst year ever because of the economy and the public's lack of enthusiasm for dodge vehicles we still ranked eighth out of 35 dealerships. the stellar sales rankings were accomplished in competition with other dealers selling multiple lines of chrysler vehicles were as tacoma dodge only had the opportunity to sell dodge brand vehicles. the dealer performance report prepared by chrysler for year
end 2008 comparing tacoma dodge with the dodge dealers in washington state shows we have a net earnings of $1,704,249. or as the group average for the same time was $680. yes, only six saturday dollars average per dealership. we enjoyed the same success with the parts business. the dealer scorecard for december 2008 report prepared by chrysler shows that in to assassinate tacoma dodge purchased $3,895,166 worth of new parts from chrysler. or as the average dealer within the united states purchased a total of only $746,107 worth of parts. chrysler designates its top 100 dealers for the sales of cars as masters dealers. we were one of the top 100 in
fact, we ranked number 76 among all the chrysler dealers in the united states for the sale of parts. in the area of customer satisfaction and retention we consistently outperformed our peers. as of february 2009 to, dodge had it will represent customer production averaged as compared to 17% average for all of the chrysler dealers in the western united states. our problems began when chrysler signed as an unreasonably high minimum sales requirement, requiring us to sell an unrealistically high number of vehicles. we didn't understand why chrysler would assign a session on reasonably high number so we look to the demographics and found that they made several errors in a traffic patterns and other demographics they use for our market area. we then pointed this out to chrysler and ask every computer our minimum skills requirements based upon the correct demographic all information. unfortunately chrysler refused to even consider our request. in the spring of 2008i attended the only dealer meeting unaware
of where by representatives of chrysler's plant project genesis to the dealers in western washington. project genesis is the name of their program to reduce the number of dealers and during that representatives of chrysler stated that under project genesis there will be to chrysler dealerships in pierce county washington and one of those would be the city of to, so that the news across our customers would be adequately addressed. on may 14th 2009i received notification from chrysler that it intended to terminate tacoma dodge as a dealer in the state of washington we have a franchise and to protect dealers from manufacturers unreasonably terminating a dealer. under the washington franchise act chrysler would never have been able to terminate tacoma dodge since tacoma dodge was one of his most outstanding dealers using any yardstick you want to use to measure our performance. however, the notification from chrysler told us we were being terminated under the u.s. bankruptcy laws which provide no such protection to dealers.
the termination of a tacoma dodge and leaves the city which is the second-largest city in western washington with a population of almost two and a thousand without a single chrysler dealership. chrysler's termination of us also leaves pierce county which has a population of almost 800,000 persons and that the second most populous county in the state of washington with only one chrysler dealership. as a result of chrysler's actions tacoma dodge which in april was ranked the number one dodge dealer in western washington can no longer sell any new vehicles nor can we do any warranty work on any new vehicles. we have been reduced to being a used car lot in a neighborhood automobile repair facility. in the process 35 faithful and loyal long term employees have lost their jobs and pierce county in the state of washington have lost a payroll of approximately 1.3 million per year. again, thank you for the up and city to have given to tell you
how the t.a.r.p. funds to authorize your being used. >> thank you for your testimony. we have a vote on the floor, it is only one so i will ask members to recess right now, go down and go and hear from mr.. and the mr. golic and go into questions so please come back in 50 minutes. we will give you a chance to stretch your legs and see you back in 15 minutes. we are in recess. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009]
>> take your time. pull the fort. you are on. >> can you hear me now? distinguished members of the subcommittee, i want to thank you for the honor of appearing here today. i would like to thank congresswoman sutton in providing this opportunity to represent my fellow dealers. we are losing seven dealerships because chrysler, the bankruptcy court, and the executive branch of our government has acted to deny us our economic rights. this is a public policy issue were the of your time and legislation. since without your intervention to restore our right to franchisees' under state law and approximately 100,000 jobs will
be lost, as a nation, can we afford to let this take place? i urge congress to enact hr 2743, the bipartisan economic rights restoration act next week. week. we have a long and proud history with chrysler and gm. the majority of our stores sell these brands and these brands only. none of our stores are dual of other brands. we have a combined 374 years of business relations with chrysler alone. we are passing both chrysler and gm and we want both companies to succeed, we are committed to helping them do so. that is why we are both disappointed and perplexed by their recent actions to terminate us and over 2,000 other dealers. we are not perfect. during those three and 74 years of operations we have made mistakes. like chrysler's managers are
managers are perfect either. nevertheless we have stood shoulder to shoulder with chrysler during good times and bad and, in fact, michael dell as the president of the dodge national dealer council lobbied this very congress for funds to belloc russell the first time. we never put on them. and they shouldn't put on us in the hundreds of others dealers who have remained committed to chrysler. this issue is not about the spitzer family. or are seven dealerships that are being terminated or even the 300 plus employees to work in them. it is about destroying the entire net worth and life's work of hundreds of a thousands employed. and i fear that these actions by chrysler and gm will lead to their demise. and all of it is unnecessary. first, our dealerships do not cost manufacturers one dime. all products and services which chrysler and gm provide are
charged back to the dealership had a profit. whether it is special tools, training, or even those colorful up brochures, we pay for all of it. we build our own facilities. we provide our own and operating capital. we hire our own people and if we lose money comes out of our pockets. second, chrysler has argued the 789 dealerships terminated or for performance reasons or to put all brands under one roof. as demonstrated by this one testimony of myself and dozens of other dealers in the bankruptcy court, many of the terminated dealerships or high performing or genesis stores or both. ..
gm's survival. dealers are there only customers. we are the face of these once proud car compani in our communities. the fact that we have survived and prospered over the last 100 years, even as they often produced vehicles american consumers did not want, proves that independent entrepreneurs find ways to survive and create employment opportunities even in tough times. if congress does not step in, dealers will be unwilling to invest in new facilities purchase them in the dollars of inventory and otherwise risk their capital in as straight law protections are meaningless and it can all be taken away in the next downturn. fewer dealers today mean fewer sailors of chrysler and gm products tomorrow leading to a further erosion of market share for both companies. allow the marketplace to select who lives and who dies, not some committee in detroit.
as of today, approximately 350 of the 789 rejected dealers have accepted their fate by objecting -- by not objecting to their terminations. does, the accelerated rate of reduction of dealerships has already incurred for those who thought a reduction was necessary. there is no need to eliminate those of us who remain committed to chrysler and gm's success. i thank you, mr. chairman, and i can assure you that i will work tirelessly and will not rest until hr 2743 becomes law, which already has over 100 cosponsors, congresswoman sutton, congressman hoyer and ben hollen and others who have supported our bill, and we have only been out three days. so thank you for your time and i'll answer any questions. thank you. >> thank you, mr. spitzer could do you want and that micah mr. golick and we will hear from mr. golick.
>> distinguished members of the subcommittee, thanks for this opportunity to testify today. i'm one of the 789 dealers that chrysler is terminating. i'm here to give my views on the situation and to invite you on what you can do to help us. my dealership is located in a suburb of pittsburgh. we been there since 1935 and been in our present building since 1948. we are a family-run dealership. i'm a third generation to sell new vehicles at our facility. one of the distinction of your subcommittee, contrapuntal, has bought three new deal untrimmed vehicles from us so he knows firsthand what we are all about and how we run our business. my family and my employees have worked very hard to maintain our excellent reputation. the golick name has been synonymous with trust and integrity. i want to tell you next about the pressure that chrysler placed on me several years ago to purchase the chrysler franchise from a neighboring dealer. they pushed me into paying hundreds of thousands of dollars to buy the franchise, and told me that my facility was fine and i could stay in my present location in definitely.
now that my franchise has been stripped from it, i've been deprived of recovering that money as i canceled my franchise is locally for hundreds of thousands of dollars. last week there was a senate hearing on june 3 and a gym precedent, that chrysler wants to bring the performance along that will allow us to the best return on our investment in the case of the dealers not being taken forward last year, we lost 55000 units of sales, uncle. i would like to let everyone know that i am one of their performance but i have always been 150% am i required minimum sales responsibility and 100% of my required working capital. my customer satisfaction rating has been among the highest in the state of pennsylvania for many years and i have always been profitable. now i would like to talk about why must dealers do not cost the factory any money, or very little money. in the case of my dealership the total cost of the factory i really believe would be about $2000 per year. to arrive at that number i'm guessing my district manager
saved 52000, i divide up by the 2060th in my district and i come up with the 2000 per dealer cost. last week at a senate hearing jim press said that each dealer cost the factory about $41000 per year which is a far cry from the 2000 i'm coming up with. he gave his side of the story as to why chrysler needed to h)k t @ @ @ @ >> that cost the factory $1.5 billion in lost revenue. what he didn't say is that when we are gone, we will lose zero hundred 40 units and the factories are going to lose $4 billion annually. you are going to lose 140,000 units. no wonder you are in trouble. i don't see the logic. he said us dealers caused the cut to $1.4 billion a year in development costs. i would like to see the breakdown of those numbers and how the 70 -- 789 guilders cost
to that much. -- dealer's cost that much you put in different wheels on the car, different grill, and different seat fabrics. i don't see the real heavy costs involved with that? but i would like to talk about the process of selecting the 789 dealers. chrysler indicated that 25% of the dealers were in financial trouble. i am not in financial trouble. how many of those dealers are . i would like to know how many of those deals that were in financial trouble are still with the copy. if chrysler was bent on eliminating 25% of their dealers, the prudent thing would be get rid of the 25% that was in financial trouble. my guess is that many of the financially troubled dealers were picked to continue with the new chrysler. i would have liked to talk about the rationale of getting any dealers at all in this tough economy. ford motor company is not getting any of its dealers and they are doing pre-good write up a in the 70s when chrysler was
in financial trouble, how may dealers did lee iacocca cut? he didn't have any. one would never think that we would see the day when someone could just take your business from your in the united states of america, but this very day is now upon us. why can't we let the free market decide which dealers survive or fail? y. dictated under the cloak of bankruptcy. that was un-american. no matter what the outcome is here, i really think the bankruptcy laws should be changed to protect executory contracts such as new car ranch eyes agreements as i believe they have represented pure revenue stream for the factory and we must protect the dealers rights and protect the manufacturers from their own imprudence. i would also like to say that at least the gm dealers that were being eliminated or given some money. they were given 10 months to wind down and gm offered each dealer anywhere from 100,000 to $1 million to help with the transition to the chrysler dealers soft landing, quote, was it three weeks on end we received absolutely no compensation. nothing. not 1 penny.
that was an unconscionable act. in closing, i would like to give some facts and figures that should point the way forward from your. i took a look back at the past eight years of chrysler's financial statements. and i discovered that they did not have a year where they make more than $2 billion profit in any one year. in fact, they lost money in five of the last eight years but the point of tried to of drugmaker, is that i really want the new chrysler to succeed. they will need every order and every sale from us dealers that they can get in the next couple of years to survive. they have exited bankruptcy owing over $13 billion to the treasury. the path chosen that it's very difficult to even make $2 billion profit in any one year as an auto manufacturer. the pragmatic approach to giving that money paid back to the treasury is to reinstate us dealers and let us order our 140,000 vehicles annually. this will give chrysler $4 billion in annual revenue to help them survive and pay back that money. i am extending an offer to
sergio marchione from fiat to welcome us with open arms, and i am urging congress to sign onto bill hr 2743 which will restore our rights and our protection under the state franchise laws to where they were before chrysler entered bankruptcy. if chrysler want to pare back their dealer body, why not let them do it within the framework of the state franchise laws which were enacted to prevent this very thing from happening again, i would like to thank everyone for taking the time to hear me out and may god bless america. >> thank you, mr. bill. and thank you to everyone for your testimony. we go to questions, five minutes each. i'm going to hold the line on five minutes. we will probably go more than one round. let me ask mr. press and mr. henderson this. the committee staff has received reports that some dealerships that have been chosen to go forward, in other words, not be closed, are being told that they should resign from positions of the national auto dealers association, an ada and from
positions on state auto dealer associations because of nadh support of legislation to reinstate straight state franchise agreements as the hr 2473. soap rdw mr. henderson or mr. press aware of any cause made on behalf of gm or chrysler to tell people not to be on these boards, state boards? >> mr. chairman, i'm not aware of any bills. >> not only am i not aware of them, if anybody in my company is doing i would like to reprimand them or perhaps let them go. >> , will you commit, mr. press and mr. henderson, will you commit to sending out a letter, a correspondent, a message to your employees of your company's that such intimidation would not be tolerated? >> we had a caulfield conference call with all of our field organization prior to starting this, and that was exactly the instructions that was given to them, to make sure that this was
done in a very positive manner to stack my question was a witch put that in writing and senator everybody? >> absolutely. i would like to know if anybody in our compa did that if you have information i would -- >> here's the e-mail from one of the. >> if you have such an e-mail, why don't you give it to one of the members so they can ask more specifically on the. mr. henderson. >> mr. chairman, i will put that in writing. >> so i take mr. press and mr. henderson you will put that in writing for us. thanks. let me ask this. mr. henderson, it's my understanding when he testified last week at the senate there was no appeal process for the closed franchise, close to dealers, and then at the senate you announced an appeal process. and you said under a review and fortify dealers have that decision reversed. so you didn't have an appeal process until you testified before the senate, right?
>> no, sir. we had planned to have an appeal process. >> does dealers that were close when they were given their notice, they were closing, they did not receive a way to appeal. you announced that wednesday and thursday, the process was made, e-mail to everybody and they had until monday to submit their documents on appealing, right? spirit yes, they needed to submitted document. >> does chrysler have any appeal process for any dealers that were closed? >> no, sir. >> so, if i may, mr. press, then the dealers you do closer could have been some mistakes made? >> our situation i think it's different than general motors, and therefore the conditions are not really -- would be saved under favorable for having an appeal process. >> because of the short timeframe lacks spirit no, not the short timeframe. the reason is and general motors, i believe and i'm not totally aware, i think they have a term agreement which is not
being renewed and there's a process to go through for nonrenewal. our situation is quite different from a standpoint that our company went bankrupt. a new company was formed. a different dealer body forward. and strategically, that dealer body that was taken forward was based on criteria not performance oriented but strategic performance criteria with regard to single line versus tri- branding and many other aspects that really, for example, locations, or even the population, demographic projections. >> but the single line and tribunal, that's not the dealers all. that's chrysler's fall. i mean, if you have to many, the seats, the grill and the design, that's not their fault. naturally chrysler's fault so what are they being punished? >> great question. i understand why you asked that and i understand the passion. >> i drive an oldsmobile. they get away with it. the last one here.
on nursing along, i've pretty close to 200,000 on it and i don't want to leave it, but at least i've got other options. but i'm mad that they closed oldsmobile. >> yes, sir. i understand the double branding. >> i've been with the company a short time. i came from toyota for 37 years, and i think everybody understands the difficulties that our company has had with regard to integrity a product, quality and appeal. and asking why that is, it isn't because people don't want to build good cars and trucks. there are insufficient resources available to do the engineering and develop necessary to build winning formula vehicles. in our case it isn't just wheel covers and grills. at about 250 to three going dollars per sister vehicle. and that investment doesn't return any incremental sales and it requires that we advertised the two cars against each other, and it's one of the most important reasons why the company went bankrupt is that we
kept taking this problem down the road instead of addressing it, which is what we get. >> my time is up and i'm sure -- but that's your decision. the dealers, even the dealers who survived, it's not their problem that we have a sister vehicle as you call. that's really chryslers problem and the new chrysler has to address the. to drop one like you did on my oldsmobile. drop on. >> we did it and that saved them money. that's 555 of the dealers that were discontinued were selling not rebrand, but one. and that was the necessary part of his. it wasn't a desire. it wasn't a plan, but 555 of these dealers had only one brand will not have viable products coming unless all three brands are under one roof that dealer body isn't going to be viable. >> my time is up your every torp would be why not allow those one brand dealers sell all three of your vehicle and keep them open. >> because our volume has gone from over 2 million a year, 700,000. and the only way our dealers
will ever survive, and i think these dealers all really understand that, is to have all three brands under one roof or they can put together the synergy, the total customer base and the fixed cost will be covered. that something that everybody wants. we have known that for 10 years. >> then let them do it. >> thank you, mr. chairman. mr. henderson, question for you. who is the purchaser of gm? >> the purchaser is general motors sir, will be 6868%, the u.s. government, 17.5% of the shares will be held by a trust and then the remaining approximately 10% will be held by the unsecured claim it's a general motors. >> so the vehicle acquisition ldings is really dominated by the u.s. treasury. >> they will be the primary shareholders to sell in your filing on the bankruptcy court, when you say on page 40, because there are now far more
dealerships than the company's market share can support, including in some cases multiple dealers in a single contracting community and dealerships that have become poorly situated as riddles of changing demographics, the purchaser is not willing to continue all dealerships. that purchaser you've done enough is the u.s. treasury. >> yes, the purchaser is the largest shareholder is the u.s. treasury. >> and it goes on to say here in your comments to the court, among the dealerships that purchaser is not willing to continue, for example, are those approximately 400 dealers who sell fewer than 50 cars per yea and those approximately 250 dealers who sell fewer than 100 cars per year, approximately 630 other dealerships are not being continued because they are dealers who in whole or substantial parts of brands that are being discontinued. so the question i have is we have been trying to get to the bottom of who is dictating how many dealerships are allowed to go forward for general motors. you told me your under oath that
it's the purchaser, i mean that's what you testified in the bankruptcy court, that it was the purchaser who made that decision. and that purchaser is the u.s. treasury. so doesn't that lead us back to the auto task force? making the decision that you're now having to implement. >> the a la mode under the automobile passport as we have gone through this process, rightsizing are dealer body. they said if they are going to buy the company they want to have a right sized dealer body. they asked the management to develop a strategy to accomplish a world class correctly sized dealer body. they were not willing to take on our dealer body as it stood, sir. >> okay. but i thought i read that some of you had said they didn't have anything to do with setting the dealer levels. >> they did not tell us a number. >> but yet in your testimony at the bankruptcy court, you say, for example, are those approximately 400 dealers who
sell fewer than 50 cars per year and those approximately 250 dealers who sell fewer than 100 cars per year. >> that's true. districts to make these are ones that the purchaser is not willing to continue, amongst others. so the purchaser did to you they are not willing to continue those dealerships. >> the purchaser asked us to develop a strategy to have a competitive world-class dealer body. one of the issues that we had were the approximately 400 dealers who sold less than 50 cars per year, in terms of not being in our world-class specs are you telling us the task force did not tell you that these dealerships that sell fewer than 50 cars per year had to go? >> what i'm saying is that the task force advised us to develop a strategy to have a world-class dealer body properly sized and address what they considereconsider to be considered concerned in their march 30 findings on our viability plan. >> on page five of your testimony, you said and i quote we have not terminated any dealers. do you believe