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tv   [untitled]  CSPAN  June 14, 2009 4:30pm-5:00pm EDT

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the problem with that is -- let me give an exaggerated example of how that can be skewed in be an unfair measurement. in ohio, there has been expert testimony. the minimum sales responsibility as a criteria has been thrown out in many cases. one of the rejected stores in sutton's dealership has a dodge dealership in ford territory. there are still owners living there. there are retirees. this dealership is right between them. 100 miles to the west, there is another dealership near eight jeep -- near oa jeep plant in
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toledo, ohio. they are held it to exactly the same standard. that is the absurd. >> mr. henderson, is gmac part of the new gm? does it own part of the gm financing? >> gm will own the shares in the new gmac. 9.9% wants the other hampshires are in a trust because of our agreement we agreed we would not sell down our interest. >> mr. chairman i just want to pick up, but gmac part. but i have to find it. i have talked to a lot of folks in my district. one of their complaints with gmac, i had a dealers tell me
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after gmac got the government dollars the immediately raised the interest rate by 6%. they made the dealer paid $10,000 just to be able to stay on, nonrefundable. he had been with them 27 years, the last seven months they changed his contract 14 times always with the threat of curtail and micromanaging and manipulate the floor stock. they told him he had too many cars so he sent them to auction and then they said they had not had an inspection and the card numbers were inaccurate. he said i did what you ask and they said you should call us to tell us that he said it would be eliminated to have a congress man in the room. this is not unique and but what terms of that side of the issue.
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let me go to mr. thomas. you have now had a brief opportunity, is this the first time you have seen the criteria upon which the decision was made in your wind down agreement? >> i have seen it one other time the last few weeks. i have seen things in this paper regarding the wind down commitment and it appears i made the wrong decision it says in the case of a rejected dealer. >> what page are you want? >> page number five. is as out the very bottom for gm dealers those that have a plan with gmac unfortunately we are with wells fargo, but for gm dealers that have a
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plan with gmac of the dealer agreement is rejected we expect the dealer would turn in new vehicle inventory which gm would redistribute. the idea of playing out 17 months sounds good and a sense for the employees, but it is a hard sell to convince someone why they should buy a past model car from new when you are not even going to be there. that is tough. >> is the hard to sell a model car from a manufacturer who people were not convinced was going to be there. >> that as well. >> did that affect your sales? >> it has affected them. >> was that taken into account? >> i think something was taken into account but i don't see it as being sufficient. we took four cars to auction
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about one year ago, two cadillacs and two corvettes and we lost $65,000 on for automobiles and project that forward, it is not a pretty picture. >> do you feel disinformation provided to the committee would give you an adequate understanding how they evaluated the wind down agreement vs. the go for agreement? i guess i will let you answer. >> the whole document, i asked specifically for a definition of what would be my fate in the state of rejection? there were really two choices. if you were wind down you could sign of the wind down agreement a tough playing bridge or fall into rejection
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and node definition of what that meant. >> you did not know the option really? >> i asked for it. >> did you get it? >> i did not get something as thorough as this but rather short answer is. i had to ask on that e-mail questions ninth, i asked about mr. henderson's comment about redistributing inventory that i think were made in the senate hearings, the e-mail response comes back, you have to call the call center. i call the call center, they don't have information about that comment or its implications. >> mr. henderson, do want to answer his question? reckon the case, first thing the total compensation in the wind down agreement is intended to be superior to termination that is why it is a high percentage.
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if you voluntary terminate we had 50 dealers last month voluntarily terminate. >> you said 80 on average. >> we had 50 last month and knowing this agreement was there. what happens they floor plan that cars to gmac it has an obligation an agreement the dealer can turn the car's back and we will be distributed cars. that is how it works. >> if you are with the bank? >> we know how such an agreement it would have to be bank by banks to make the highest percentage hour floor plan with gmac it. >> what does that mean for you mr. thomas? >> i would have to talk to my bank. >> you have an agreement with bank of america or elsewhere go? >> i don't know. this would apply only in the case of the termination as opposed to the wind down and we would continue to work with
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the dealers through october 10. >> guy realize my time is over but to both gm dealers and wind down, what effect does it have on your ability going forward not to have the new product line going into the next year? you will still be with a lot? >> we will. we will not have the current offerings. >> how does that help the gm? i do not understand that part. what am i missing? how does them not be able to buy your new model vehicles help the 2010 vehicle? >> first of all, the one element of the wind down agreement is they could no longer purchase of new vehicles they could purchase parts. >> my question is why? help me understand that makes sense purdue make money by
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selling vehicles. right? they make money by selling the same vehicles. why would you want them buying your 2010 vehicles than it is there problem. right? they go out of business at the end of january. >> for the purpose of the wind down agreement to we offered incremental resources for the vehicles in inventory it was over a 17 month period to wind down their facility as opposed too repugnant -- replenishing their stock and have a problem at the end of the contract. >> when the model change occurs everything we have will be yesterday's news. it will be very hard to get from october 1, 2009 through october, a 2010. >> that is my point*. i said i felt if he were
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terminated by mid did your dealership deal terminated? in fact, it is much shorter term provides realize you are buying out but in the fact it is taking effect this fall? >> that is my sense. >> do you track it the same way mr. blankenbeckler? >> yes. in regard to the handout that was just given out, i could get no information to speak of the in regards to what your fate was should you not sign the wind down agreement from i was repeatedly, repeatedly, repeat edly called where is your agreement? where is your agreement? where is your agreement? 8d understand it? >> i can read. i and a stand what it says. that border the provisions of
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not signing? you will be rejected. what does that mean? let's talk about a provide to half a lot of paid vehicles icahn for every vehicle i have got and if i can pick up the phone and say gmac to get $4 million worth of inventory, at which 90 days or right now they are starting to produce 2010. and a business that appears to be going out if this a long leash until october i would like to make one other comment. one of the provisions of the. >> host: agreement i am paraphrasing, states in
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>> i will produce years of records, customers' names, telephone numbers, my service customers' telephone numbers. i am giving 25% of my wind it down money. i am paraphrasing this. the purpose of all of these electronic lists of my customers are to be used and given to another third party. they will be given to another dealer. that is how i read it. what i have earned for 84 years -- the bulk of these people are my personal friends. i have to give their names and telephone numbers. you helped with the federal statute. i am not an attorney. but i see this is a huge
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liability to a dealer, to turn over their customer lists. you would not go to a doctor's office and ask for medical records and get it. >> you mean that one customer brought an action against you? >> i cannot see how that would not happen. my question is why i have to supply my customers' names. everything i do is sent to you electronically. every sale i may, i give you the name and address. you have that. same thing for the warranty records. it is given to them. all of these data processing deals are thrown back on us. we pay for those things.
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i would really like to hear what he would say in response to my fear of turning over my customers'identity. >> can you respond to that? >> does gm assume the liability? >> we have a privacy policy. we have had excellent experience with being able to properly controlled consumer and customer information in our history. >> it said any agreement it will be given to a third party. if it is given to a third party, i do not know how you will control it. >> as i said, we have been able to manage it over time. >> we have to move on. we have to do the questions from here. i am sorry. >> mr. mceleney, what is your
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opinion of the dealer closing plans in terms of substance and procedure? please submit your response for the record. >> in both cases, i think they weren't too -- i think they were too -- >> i would like specific criticism. i would like it for the record because we only have five minutes. i would also like to know how those could be improved to result in fairness, in your view, to the dealers. cracks in the case of both gm and chrysler, it was not as transparent process. in the case of gm, there was an appeal that was favorable. it was not in the case of chrysler. i think that is problematic. the chrysler dealers will be provided that criteria. it would seem to make sense there would be an appeal
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process so the chrysler dealers that had been canceled can evaluate that. in the case of gm, the wind down is more favorable. it allows them time to sell off parts and inventory and reasonably close their businesses in a rational format. in the case of chrysler, it was very abrupt. 26 days. it decreed all kinds of problems for dealers and their employees. i would not speak highly of that. >> what does it cost a gm dealer to wind down? how much will he lose per car? how much will a chrysler dealer lose per car? >> i have been a dealer for 36 years. i would guess in the case of gm, there would be some cars at the tail end of the process with less popular models left. dealers could lose several
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thousand dollars in those cases. it depends on their own situation. in the case of chrysler, at those dealers with vehicles left do not have a license. they cannot sell them. they cannot get the chrysler incentives. the cost would be many thousands of dollars. it could be up to $10,000 per vehicle. >> what charges are in the closure plans better detrimental to the dealers? how could that aspect of it be improved? >> i do not understand the question. [laughter] >> what is there in the two plants which is particularly hurtful in terms of costs to the dealers?
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how could those matters be improved? >> in the case of both gm and chrysler, when a dealer is losing the franchise, they are losing the value of the franchise. it is going to zero. >> i want to know about the specific charges per car. chrysler has 8 $350 item that they have to pay. are there other charges like that in either one of these plans that would impact upon the dealer? >> not that i am aware of. in the case of general motors, they're not buying the cars back. they're providing the dealers an opportunity to sell them over months. >> i am going to submit a letter. there will be other letters submitted. i ask consent that those letters and responses be inserted into the record. >> without objection.
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>> given your assertion that dealerships do not cost money to maintain, why do for and transplants have significantly fewer dealerships in the united states than their domestic competitors? >> i happen to be an import dealer as well. i have some perspective on that. the business model for the import, the transplant manufacturers, is quite a bit different from the domestics. gm and chrysler have a strong market share in the world markets -- in several -- in the rural markets. it is a competitive advantage for them to have representation in communities of less than 100,000 people on average. have some 5,000 on average or a toyota or honda have no interest they will not backfill these locations that are being closed with a
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franchise. >> why would they choose not to back those kinds of franchises? that is the root of the question. >> based on my experience i would say they don't see the market opportunity for their brand as they do in more metropolitan areas. >> mr. press, but mr. henderson, mr. mceleney has indicated the franchisees do not cost manufacturers money to maintain. do agree with this question and agree with his position or do not? >> i do not. >> i do not. >> why? >> and our situation, one of the main reason is that caused our bankruptcy and a week product engineering is a requirement that we provide individual models for each
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standalone franchise, the sister models that cost substantial amount of money and took resources which in negative sales that is a huge cost. the sec and of course, is lost sales, lost volume in a market underperforming, those sales don't provide revenue for us. they lose that and it was 1.5 billion dollars, the development of individual models is 1.4 billion. that is a very real situation. third, because we have so many dealers and the average dealer of loses money, we don't have a competitive dealer network that can compete with other manufacturers with customer satisfaction, location, of facilities, advertising, a substantial cost to the company. >> mr. henderson and? >> in my testimony i talked about the cost of the company
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over time has incurred to provide support for a dealer body total which is financially weekend -- weekend. there is that cost in the testimony. second, general motors market share is a 10 full market share points higher than it is on average it is a source of strength even when done with restructuring will also have the most extensive dealer body in rural america up. what cost us is insufficient distribution in metropolitan markets where we have many locations and a few strong one's. that is a significant problem today. >> it has been estimated the average for foreign transplant dealer is twice that of a comparable domestic dealer. is this true? yes or no?
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>> i don't know exactly double blood is a substantially higher, perhaps. >> toyota reverses a chevrolet approximately would be double. >> if this is true, but apparently it is, why is that the case? mr. press first. >> the reason and toyota's case they sell 2 million cars at a 1200 doo there's and if we did not have the restructuring we would sell about 700,000 retail out of 30100 dealers. average sales per dealer is substantially different. as and toyota case the product line is less truck oriented and more mature market or sunshine states in a bus presents in the rural areas are secondary markets and also don't have the 80 year legacy of having a substantially
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higher dealer body to see the volume disappear. >> mr. henderson? >> i don't have anything to add. >> gentlemen do believe your respective numbers of dealerships has been reduced for your restructuring plans and sfo has parity been achieved through these plants and a way which will be adequate with regard to our foreign transplant competitors? >> we tried to achieve a dealer network going forward to have a minimal impact on removing dealers there have been critics that say we did not go far enough, we did not want to go all the way to have parity but we are in a good position to go forward and have the dealer network emerge over time. but through the bankruptcy and
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we have the optimum number of dealers going forward. >> in our case, we would expect 3600 dealers would have the throughput almost doubled. >> it has been said that the dealer said be allowed to remain open while you are terminating service and support. what is wrong with that arrangement? >> there are existing dealers that surround them that are taking the franchise. the dodge-jeep dealer may be taking the chrysler franchise. they are adding overhead. that is part of the business that would travel with it.
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>> are you saying this would have an adverse impact? >> it would have an adverse impact on and jason dealers. in some cases, there may be a single point that has a real customer situation where they cannot achieve the location. we will is had an opportunity to take a look at of minimal number of companion points. in this particular case, it would substantially reduce the ability of the dealers that go forward to derive the full benefit of their business. >> i would have the same response. >> congress is expected to work on a number of spending measures next week including a report on the supplemental bill. it includes funding for the wars in iraq and afghanistan. the house could vote on it on tuesday. later in the week, the house plans to take up spending for the homeland security apartment. they will return for business on
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monday at 2:00 p.m. eastern. in the senate, a key procedural vote is set for tuesday on a measure aimed at boosting foreign tourism to the united states. congressional republicans are expecting to unveil their health care plan on wednesday. the president hopes to sign a health care reform bill by october. you can see the senate live on c-span-2. >> there is still time to get your copy of the 2009 congressional directory. it has information on the house and senate members, the cabin, supreme court justices, and governors. it also has district maps and how to contact committees and caucuses. you can purchase it online or by calling the toll-free number. >> today, the senate minority
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whip discusses some of the issues on the senate's agenda including health care and the confirmation hearings for the supreme court justice nominee. >> there is a lot of reading involved. i was reading some very troubling things last night about her views towards international law. she was saying that you can interpret the united states constitution by looking to see what public opinion is in europe. public opinion in europe has nothing to do with what our constitution means. if that is really her point of view, that is very troubling. i could not vote for a judge who believed that. she has said it on several occasions. i'm going to ask her what she means by that. republicans could probably filibuster this, but there are not enough of us. none of us are talking about a
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filibuster. it is in response to questions from the media. we are not proposing this. as you point out, it would be difficult for us to pull off unless the democrats join us. >> that will be today at 6:00 p.m. eastern here on c-span. >> the government funding of colleges is the late 1950's and early 1960's thing that has grown rapidly since then. >> kill still -- hillsdale college has never accepted government funding. even state loans are not permitted. >> we have a lawyer here in town that tries to keep the government from giving us money. i want to ask him to send me title for. he said it was no use. i would not be able to read it. >> the college president will be on it tonight at 8:00 p.m.. you canls

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