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tv   [untitled]  CSPAN  June 13, 2009 4:30am-5:00am EDT

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>> thank you, mr. spitzer could do you want and that micah mr. golick and we will hear from mr. golick. >> distinguished members of thú
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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
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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 eliminate 789 dealers. mr. press said that the dealers should have sold 55000 more units than they did last year, and that cost the factory $1.5 billion in lost revenue. what he didn't say is that when we are gone they will lose 140,000 units in annual sales and factories going to lose $4 billion annually. so let's see, you're worried about the 55000 units but you're going to lose 140,000 units. no wonder you're in trouble. i mean, with that kind of thinking, i just don't see the logic. second, he said as dealers cost the factory $1.4 billion a year in developing cost. that's a very large sum of
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money. i would really like to see the breakdown of those numbers and have a 789 dealers cost you that much. you went into this theory about how you have to have two separate bands that the chrysler and dodge and not cost you money to build a different minivan. different hubcaps, different wheels on the car, different grille and different seat fabrics. i don't see the real cost, heavy cost involved in a. i really don't. next i would like to talk about process that selected 789 dealers. and chrysler's liability reportedly submitted to the government in february kreisler indicated that 25% other dealers were in financial trouble. i'm not in financial trouble. 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
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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
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dealers soft landing, quote, was it three weeks on end we received absolutely no compensation. nothing. no 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
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$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
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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
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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 company 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.q you said unded fortify dealers have that
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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.
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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 man the seats, the grill and the design, that's not their fault. naturally chrysler's fault so what are they being punished?
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>> 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
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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.
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>> 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 holdings is really dominated by the u.s. treasury. >> they will be the primary
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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.
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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 gn h@ @ @ @ @ @ @ haámbeaãs4@ @
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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.
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>> on page five of your testimony, you said and i quote we have not terminated any dealers. do you believe that? >> yes. can i explain? >> please. >> what we have done, we have offered dealers who will not continue with this on the wind downgrades. that term is to provide a period of time in which to wind down their, allow them to purchase parts, perform warranty service, and over time they would no longer, we would not renew their contract and they would no longer be with us. >> okay. and beginning this fall they can't buy the 2010 model year cars and you. >> they will not be able to purchase new vehicles. >> it sounds more like you have diagnosed them with terminal cancer, just not going to take about. mr. thomas, do you feel terminated? >> very much so do you want to bring up your microphone up close? smack i feel terminated. >> why do you feel terminated? because i don't have an
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opportunity to be a full-fledged general motors dealer anymore. can order new cars. i can't return parts. i'm partially in the game but i'm not really in the game. >> calabaza gemma next to you? >> do you feel terminated? >> absolutely. >> why? >> same reasons that mr. thomas said. marketplace where i do business has viewed us as going out of business. the precedent to our dealership, tv stations have been to our dealership. my employees are extremely worried, extremely nervous. it's just like beige. >> could have been a different way -- i think you mentioned that you've had sort of standing offers from people to buy your dealership over the years. >> there have been people approaching. i'm sure mr. thomas has had
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people. anybody who has a good viable business. >> could there have been a different strategy or what if you weren't meeting the goals that general motors set for you, you could've been given time to sell your dealership? did they give you an opportunity to change up what it was? >> no, sir. >> and when they have evaluated you in the past of the adversary if you don't do these seven things, next reauthorization were not going to be there for you? >> no, sir, they didn't. and outside of bankruptcy they couldn't say that. that's why they wouldn't. >> my time is expired. thank you. >> thank you to mr. dingell, for questions, please. >> we have a very difficult business here. we have to decide how we are going to protect the rights of the dealers and at the same time see to it that we restructure our american automobile industry so that we save the rest of the dealers, as many other workers as we can, the jobs and the communities that are affected.
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first of all, to mr. peres and mr. hendrick. do you have written roles for the closure of dealers and for the termination of the dealers? >> yes. >> yes or. >> would you please submit each of them to the committee with such accompanying remarks as you would like to make. now, there is no appeal right for a dealer in the case of chrysler, is that correct? >> that's correct. >> are their appeal rights for general motors? >> yes, there are sir. >> would you submit to the committee the precise character of those appeal rights. now, would you tell us, please, mr. hendrix and mr. press, just give us a number, how many of the dealer terminations have been changed by the company under the companies under your appellate procedures or under
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your categories and standard? >> at this point we have changed 45 decisions. we are not complete without reviews but that's the status as of this morning. >> mr. press. >> we have had no change. >> all right. i have heard of the dealer who was terminated. i won't tell you which company it was. were a big storm had caused the collapse of a bridge, and that dealer was essentially shut off from access to his customers. and he was terminated but the company involved has seen fit to reinstate the dealer because they understand the facts. do you have provisions in your termination agreement, mr. henderson and mr. press, that would permit you to address that kind of problem? >> yes, sir. that was a general motors
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dealer, and when we we look at the facts after the submission we conclude that we were in error in our decision and we reversed that decision. >> mr. mceleney, if the legislation that we are working on nasa's, and it screws up the bankruptcy process and causes the collapse of either or both of the companies down the road, we're going to have a rather nasty situation on our hands. part of it is going to be we are going to see all the dealers out of business, all the plants close, all the communities hurt, all the workers and all the suppliers hurt. what do we do about that situation?
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>> sir, i think with that situation, you know, this is not a normal bankruptcy. as you know this is a government negotiated bankruptcy. the debtor in possession financing beige. >> i understand those things but what are we going to do if that result is occasioned by the situation? >> i don't think that will happen. i think the fact that the government is involved is going to present data mapping. >> is that a statement or a hope? >> part may? >> is that a statement or a hope that it's not going to haven't. >> i guess that's a hope. >> i doing in the hope of. >> thank you. >> mr. press, mr. mceleney searched this. none of chryslers submissions to announcement could have been interpreted to put chrysler dealers on notice of the scope of the termination as follows your is that statement true? true? yes or no? >> i'm sorry? >> mr. mceleney state as
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follows, none of chryslers submissions to the government prior to may 14 announcement could have been interpreted to put chrysler dealers on notice of the scope of the terminations that followed. guesser no, is that true? >> we have had a genesys program, dealer consolidation program in place for more than 10 years, and i think the majority of those dealers had good, long time to prepare for that. >> would you submit for the record your comments that proves that this is not the case. now, mr. mceleney, did general motors give adequate warning prior to its may 15 announcement that it would be winding down approximately 1200 dealers, yes or no? >> yes. >> interpress, please describe briefly what chrysler is doing to reclaim and redistribute the inventory of the 789 dealerships it announced would be closed. >> mr. deal, just one second that i now think i understand your question about notification to the dealers versus no in that
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there was a reason they may not -- the notification to dealers, there was not any additional time given, the primary reason for that was until april 30, at 6:00 at night, before we had to file for bankruptcy we did not plan to. this was not a plan to go for. we had no knowledge of this, and after that may 1 is when we began to develop this program. so there was no notification. >> all right. now, mr. press, if you please. what is chrysler doing to reclaim and redistribute the inventory of a 789 dealerships it is announced will be closed? spec we have committed that we would redistribute every single vehicle and every part. >> how about specialized equipment? >> and a specialized equip and. i'm happy to say 100% of the vehicles have already been committed to. they have started moving. we are at 80% on the park and about the same on specialized equipment. we will continue to work until that commitment is fulfilled and
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all of those burdens are really. >> i want you to listen to this question carefully. how much is it going to cost each dealer that is being terminated on each car from the termination? are there any fees associated with that? do they get the full value of the car? is a distressed price? how will that be addressed? >> the price is at the invoice price that they paid less, $350 for inspection, cleaning and transportation to the dealer that will be selling the vehic vehicle. >> can general motors give you the same answer? >> indicates a general motors, to the extent the dealer signed to wind down agreement we would expect that moment of court over the next 70 months to sell down their inventory and they would be afforded the same driven as any other general motors deal with respect to retail and support for selling to customers. >> how much cash money are they going to be out in the case of
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general motors? >> they shouldn't be out any. >> when you take back inventory? parts, vehicles and specialized equipment. >> the case of general motors if the dealer chooses to wind down, we anticipate through that period they will not only sell their cars, they would sell their part by virtue of the fact that they would be able to ride work in service to customers and finally the tools would be amortized. a dealer who terminates, if they just choose to voluntarily terminate by virtue of our agreement with gmac, a dealer can return the cars to gmac and we would redistribute the cars with no cost to the dealers. >> thank you. my time has expired. . .
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>> all precedent would be that it would be the responsibility of the dealer. . we would need to reduce the inventory and do it in a way not to cost the taxpayers in the redistribution program. redistribute 100% of the vehicles that we are happy to
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say that is complete. >> that had to happen very late last night because as 7:00 last night we had phone calls from dealers say we have cars and they will not take them back. >> we have made that comment and have written notices, it is in the newspaper bree will continue to provide dealers information. we have reduced to the cars to other dealers physically they may not have left the law because we could not begin until yesterday when the new company formed but we are at it. anybody that has it please give them my name i would be happy to talk to them. >> we will. you mentioned taxpayers but every one of the dealers are tax payers as well. >> thank you, mr. chairman. there is another hearing going on so i have been shuttling back and forth i also need to alert mr. blankenbeckler there is a play into texas calling my name so i may leaft

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