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tv   [untitled]  CSPAN  June 14, 2009 3:30pm-4:00pm EDT

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we do and resubmitted those last night. >> yes we do. >> does the dealers know of these criteria? >> and our case, they were not notified of the criteria prior to the notification. >> mr. henderson and? >> in our case weak%@@ @ rr"@ @r to the staff. of this committee. we could resubmit them. we will get them to you if you do not have them now. you are under oath and i don't want people to think we're holding something back. we don't have any criteria
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agreements. >> i think we had just established one of the puzzlements. mr. blankenbeckler and mr. thomas and the other dealers to be told their dealerships will be revoked and get to they did not have any prior knowledge of the analysis and criteria that were being used and apparently to this day don't have the knowledge. mr. blankenbeckler is that a fair way to run a railroad? >> no. >> mr. thomas? >> i think it has been an open process. >> that is one of the problems i hope mr. henderson and mr. press realize that. >> if i may? is this the document? >> yes. on page three we outlined the dealer performance score and the way teams are in their 50% sales come a 30% customer
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satisfaction on page three of the document. >> i thought this was a power point* presentation and i did not at the think that is it so this is the criteria? >> we will have copies made. >> mr. blankenbeckler since you have received your two leaders -- letters as anybody come to you and say we want to explain why we have done what we have done and we want to give you a chance to show us the error of our ways and if you wish to continue a business relationship this is what you need to do? >> no. they have not. >> mr. henderson and mr. press, do think it would be reasonable business practice to give dealers said in some cases have decades of relationships with the companies that you had some opportunity to know why they
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were evaluated the way they were and give them an opportunity to show why they may have been evaluated unfairly? >> yes, sir. i would like to add that because of the fact our notification was coincidental with the bankruptcy action, a lawsuit was brought and the fact we could not have a lawyer in an active lawsuit in every discussion we were not in a position to do that until yesterday. year more than happy to have those discussions going forward now that the lawsuit has been finalized. >> mr. henderson? >> as of yesterday we received 856 request to reconsider our decision, we reversed 45 weeks elected to complete the review by today but given the number of requests we will plan to work through the weekend into monday to finish this and are willing to consider all
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request for consideration. >> mr. blankenbeckler you told me privately the amount of investment you have in your dealership, if you wish to would knowledge that, i would appreciate it if you would, but in any event, if you don't, i do you feel before that investment which has been built up over 84 years is just wiped out you should have some opportunity to get some renumeration or have a discussion about renumeration with gm and chrysler? >> i can imagine why that would not be the case in this country. i don't see as i said in my statement, i don't see how that could happen. >> could you give a general parameter of the amount of investment your family has made over the past years? you don't have two. >> i don't care to state that.
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>> i will say for the record. >> i am not any different, it is a large sum of money. >> it is magnitude that of more than my net worth but i yield back. we'll thank our witnesses and they're chairmen and i do hope that talking directly to mr. henderson and mr. press you will come up with some protocol ford dealers that mr. blankenbeckler that wish to continue a relationship for given a fair opportunity to plead their case for i hope you do that. >> mr. braley? >> do you know, a jennifer fox, mr. press? >> i may. >> you know, a jennifer fox to works in the washington
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d.c. office? >> yes. i don't know her last name. >> i assume she uses an e-mail address that and seven that is an employee of chrysler? are you aware chrysler is attempting to convince chrysler dealers who have not been terminated to ring gauge in a lobbying effort to point* out the positive aspects of the consolidation through bankruptcy that has been going on? >> i am aware the fact because of the publicity there are 391 dealers that have benefited and they give to the league and 100 year dealers 21 the opportunity to make their position known. >> are you aware chrysler has been sending out talking points under a key messages memo that says chrysler llc
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made the appropriate business decision with the dealer network that could be thriving and profitable and the automobile industry cannot support the number of dealers that currently exist. dealers have known chrysler wanted to consolidate and locate all three brands under one roof and started the process more than 100 years ago we understand the process to evaluate the dealers was thorough based on data driven metric and is a dealer moving forward with a new company i plan to purchase some of the eligible inventory, were you aware that is going on? iraq that is in our testimony, part of the speech with consistent communication. number of dealers ast they but like to be have their voice known as well. >> let me ask you about the 1.that dealers have known, this has come up during the testimony today that chrysler wanted to consolidate dealership's more than 10 years, if that is the case
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then why didn't that happen in the numbers we have seen until this bankruptcy rose? >> has been happening, at great question. i can understand what you ask that the consolidation has been the ongoing process. a year and a half ago we had meetings dealers were identified they knew which it would go forward and which locations and we give them a tool box of real-estate, tax planning to facilitate those discussions and transactions and some of them did. >> you have to agree the volume of close to dealerships over that 10 year period it pales in comparison to the announcement that grew out of the bankruptcy. isn't that true cracks remain because the bankruptcy was caused by the fact that we were made to support specific dealers days vehicles for specific dealers now that that
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did not get carried 40 new company is formed. >> i understand that and i only have five minutes. you talk about the data driven metric is that the requirement that was requested? of those contained the data driven metrics you just identified? >> yes. we have submitted we will submit the criteria and provide additional data as requested. >> in your testimony before the senate commerce committee you said chrysler loses over $1 billion annually because of underperforming dealers and mr. henderson you claimed in similar testimony that dealers and add $1,000 of cost to every vehicle park road to you both have financial analysis that was conducted before the decision was made to terminate the deal their franchises that supports those allegations you made in your testimony? >> yes.
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we have the analysis of the sales situation and that does exist. we knew the number. >> it was added and submitted as part of your testimony? >> sorry? >> for today's hearing. >> not by dealer. >> can you provided to the committee? >> there is confidentiality data we receive. >> i know there is a need to redact information to protect confidentiality is still give the impression i am seeking would you agree to provide that? >> as long in protecting the dealers right. >> the same question for you, does gm have been dated to support the statement that you made that the dealers are costing york company $1,000 per vehicle? >> as i mentioned in my testimony, we have an overall cost per vehicle that is articulated in the same package resubmitted last night
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approximately $2 billion, a 2 million units. >> do you have the underlying data that was used to make that calculation and is in the materials we have received? >> yes. >> you can identify that for the committee? >> on page nine, and to last page. >> on that page, we made the calculation, and you have supporting documentation for the conclusions that show the portion for dealer margin, incentives paid common standards for excellence come on and on blackstone's numbers are not just published somewhere as a standard cost factor associated with each vehicle are they? >> what i outlined in my
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testimony these are cost over time have come into structured to provide direct support. it is not identified per individual dealer because it goes to all dealers but best in class competitors do not have the same sort of support. >> my time has expired but it seems there are plenty of unanswered questions the committee needs to explore on this subject. >> i ask unanimous consent to put this document from general motors that looks like they may have e mail last night, but 10 pages, the one we have been discussing. >> without objection. i would make the point* it may be helpful for the dealers to be able to see a copy to review. >> since it is in the record we will put on the table if they planned to look at it. >> that will be helpful. >> next mr. burgess. >> i have a map of the united
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states that pertains adjust to chrysler for the moment. it looks like what a republican and what would like the electoral map. [laughter] but it is chrysler dealers. my state of texas all the three happen brothers release baird in the economic downturn, our state has been hit pretty hard with the closings. there is a member in the northeast, as chairman of the house financial services committee able to make a phone call to get one of this dealerships or distributors to stay open. what is the number i need to call? is it 1800 car czar? celly who to call so i can help the dealers in my area that have been so badly hurt. >> i don't understand your question with all great respect to the office, i have to say i am not aware of any
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dealer that was ever removed from the list that was submitted to the judge. i have no knowledge of that. i would very much like to see if i could get that. >> it was in all of the paper's yesterday, at barney frank made a call to someone and got his dealer to stay open. it is unconscionable what is going on also is good joint economic committee i was just told a gm dealer. i am sorry. so that is mr. henderson. >> it is not a dealer at all. select just tell me the telephone number that i call. that is what i am after. >> we have to look at the sales warehouses big long two general motors and is part of the restructuring plan for facilities to be close. >> will interrupt you but the fact is a member of congress made a call and it was not closed that was slated foreclosure. it is fundamentally unfair
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producing the people at this table they represent family is in everyone's the district. this process has to be open and transparent and fair we have a president elected on can either of you answer that? >> it would have been general motors, the staff of the sales organization as well as the council. >> and for chrysler? >> there is no similar agreement. we have no wind down agreement. >> with him in the white house have either of you communicated regarding the restructuring of organizations? >> our restructuring plans have been part of our bankruptcy and part of our application for funds as the tarp funds were
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available through treasury, they have been -- they have been made aware of our process. doing. >> with this committee be able to have access to the e-mails between your company and the white house regarding the restructuring in the case of general motors? >> absolutely. >> could i convince the chairman to do so it would be easier if that could be made available to us. >> in our case, i have no weight tm how many that is but we have been keeping some of them a better subject to litigation but i will come back to you. >> have either s of the spoken to brian? >> i have. >> have you exchanged e-mails with this individual? >> i think so, yes. i don't think i have addressed
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12 him i think there may have seen and e-mails vivica would like to submit i would be particularly interested in those e-mails to be made available to the committee and made part of the record. i would like to spend some time before i finished up, the tar plans, a taxpayer funds paid by the employees of these dealerships have gone to fund the closing of these dealerships. i sit on the joint economic committee we see an employment numbers in excess of 9% 9%, heading for 10 and what will that look like after you decimate the steelers across the country? that is a rhetorical question but mr. kollek i did not intend to ask this but your story is so similar to a story i have heard done in my district a gentlemen be required, if browbeat into buying a dealership now he has
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to close the original dealership or the one that he purchased are you aware of other areas in the country where that occurred? >> your note that there is always some sort of animosity between the factory and the dealer. i don't know it does not need to be. ford, there's no animosity between the factory and the dealerships. i think they will come out okay. >> are you getting remuneration from the manufacturer to dispose of your inventory. >> would love to tell you about that. mr. press may sit sound like sunshine and lollipops. you're exact word was invoice we're selling them mop at invoice negative o back ashley ppa minuses of 350 we are selling cars 1500 below invoice on average. we normally sell to the public
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as and voice or right around there. we are selling them up 1500 less than we normally do to the other dealers. >> parts inventory? >> mine has not been addressed yet. i don't know. i am still in a state of shock. >> i was told when chrysler came to see me yesterday i was told they took care of all of their dealers they are closing and inventories and cars and parts inventory of would be purchased. >> what needs to be understood, there is no written procedure how we will be paid. thank god i only have two new cars left but some have half a million dollars worth. we hear the cars will be trucked away and we will wait for the money some hopper i have not seen anything on paper obery will be paid. that is an important aspect. is there a written procedure? >> first of all.
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>> dell webb has been megabyte to respond to the issue of three imperfect -- reimbursement. dealers are being reimbursed what they paid for the vehicle, what it cost them less $350. though word invoice comment it includes the hold back that we collect and give back to them but they are being paid what they paid us less $350. >> that is just 2009. >> in terms of the process we have published the process for the redistribution, we have asked the dealers to sign an agreement that allowed us to take responsibility and what the process is and it is available for them to understand what can be used. >> mr. spencer i know you are jumping in but go ahead.
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>> speak into the microphone. >> you asked the question of other dealers in a similar situations of the stores that were terminated, three of them were project genesis stores, one of them under way, we purchased a piece of land at chrysler's insistence, 1.$6 million in the market and that store was in the area they wanted to get away from. and quote we're undergoing construction and, if they agreed to hold off construction because of the market conditions for one more year than they cancel the franchise. we still own the church and their penalizing us for results in an area they want us to get out of. >> time is up. this cries out for further investigation i hope this committee will do a very
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thorough job as to what is going on in. in texas it looks like we have cleared the decks but of who we are clearing them for progressivity is about to make a lot of money on the re-emergence of chrysler. by to know who that is and what is in the works by have a nagging suspicion there is a political calculation and it is extremely distasteful would you like these gentlemen who have had unconstitutional takings of their private property. i yield back. >> mr. press, i blind to ask you if chrysler has a similar set of written criteria as gm for its closures? >> i am not familiar with this document. >> let me ask you does gm have a written i am sorry, does chrysler have a written set of procedures foreclosures? yes or no? >> yes. >> does this committee have that?
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>> it was published. >> does this committee have it? >> i cannot answer that. >> mr. dingell suggest you submit that for the record and we would appreciate that. a secondly, i heard both gentlemen, mr. henderson and mr. presser testimony about what could make a dealer profitable, using cars or parts or service saying or other things. i will start with mr. henderson, if a dealer is profitable, and buying cars from the manufacturer what it is selling, what does it matter if the profit center is derived from new cars or sales center or parts? >> good question the. >> thank you. >> in the case of the dealers who were impacted in the wind down situation 60% were not profitable. >> my question is if a
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dealership is profitable then it why should you care what center? very quickly. >> we look at overall profitability not individual centers. >> right. but if a dealer is profitable from whatever source and buying cars from gm, why would you care? if it is profitable then why not let it stay in business? >> we don't care if it is from parts. >> so why would you close a dealership like that? >> not all cases were profitable. >> customer satisfaction. >> now it is customer satisfaction? >> multiple criteria. >> mr. press? >> first of all, we have two many dealers. >> why would you care if they're profitable and buying cars from chrysler? regular way to survive is to have all three franchises under one roof. that is the way in the dealer
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will survive to have tried branding first of all. >> what criteria is to have all three brands under one roof? spirit that is the position we will achieve. >> that is not the only one. >> in colorado chrysler has terminated five of the seven top performing dealers including chrysler store in castle rock which is not in my district. they sell all three brands under one roof. so and they are profitable so what would you say to them? you probably don't know. >> it is difficult to go through each individual dealers. >> but what would the criteria before a store like that? >> i am not sure you say they're the top performing store i do not know what that means. >> chrysler dealerships five
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of the seven top performing dealers in colorado. this dealership in castle rock is profitable and has all three brands under one roof. so for people like them, not them in particular, what is the next criteria? >> if it is not top performing it is costing sales. >> it needs to be top performing and have all three and what else? >> minimum sales responsibility so we're not losing money and revenue. . .
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do not have enough products to support all the dealers in every available market. i understand what you're saying, but castle rock is one of the fastest-growing areas. it is one of the fastest-growing areas in the county. without getting into that particular, and i know you don't know the particulars of every single one, but i heard you say that unlike general motors, chrysler does not have an appeal process. my question to you is, do these dealers no exactly why their dealership was terminated? have they been given the information? >> because of the proceeding and bankruptcy and because it coincided with a lawsuit, we were not in a position to communicate -- and i want to clarify -- but now that we have come out of bankruptcy, we will communicate to the dealers and let them know what the factors
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are. we have a very robust process that was fair and equitable, tested and approved by the bankruptcy judge, but the appeals court in new york and the supreme court of the united states. we would be more than happy to allow committee members to see the same information. it is difficult, but we can go through individual dealers. >> what you would say is you did not tell the steelers before exactly why they were terminated. you could understand why they are upset? >> i can understand the whole situation. it is not a spectator sport. >> i used to be a lawyer in a different life and i don't know of any provision in the bankruptcy rules that say you cannot help people. maybe that was the bankruptcy judge that told you not to tell people, but it seems you need to give people the information. >> the was a lawsuit filed on behalf of the dealers and it became very difficult for
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information other than discovery to go forward. but now we are out of bankruptcy -- >> what is your time frame for that? >> we are fully prepared at any point to become transparent with the dealers would like to. >> so you can get that out in the next week? >> perhaps sooner. >> thank you very much. thank you very much, mr. chairman. >> mr. doyle for questions. >> thank you, mr. chairman. >> i'm a co-sponsor and it took me about two seconds to sign that bill. >> is your microphone on? >> in -- you say you have a very objective methodology to determine what dealers survive and which dealers cannot. you can feed the dealer data into a computer and have a very objective criteria and


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