Dealers Get Legislation Introduced in Congress to Restore Rights to Chrysler and GM Franchisees

Dealers Get Legislation Introduced in Congress to Restore Rights to Chrysler and GM Franchisees

The culmination of numerous dealer meetings with most members of Congress over the past 60 days and countless inter association conference calls between new auto dealer associations across the country has resulted in legislation in the House of Representatives to restore rights to Chrysler and General Motors dealers who lost their franchise in the bankruptcy reorganization of the two OEMs no less than those invited to go forward.

HR 2743, The Automobile Dealer Economic Restoration Act, was launched last Friday by Reps. Frank Kratovil (D-MD) and Daniel Maffei (D-NY) to be immediately co-sponsored by Rep. Chris Van Hollen (D-MD) and House Majority leader Steny Hoyer (D-MD). Van Hollen, a ranking member of the Democratic Caucus, has become the lead spokesman on the Hill for HR 2743 after being persuaded by constituent Montgomery County residents and dealers Jack Fitzgerald and Tamara Darvish that the legislation was needed.

The measure would preserve General Motors and Chrysler car dealers rights to recourse under state law and require the companies to reinstate franchise agreements in effect prior to each companys bankruptcy while making clear that the legislation is not intended to undo the

bankruptcy court ordered transfer of assets from Chrysler LLC to NewCarCo Acquisition LLC or the transfer of General Motors assets that could be approved by a court after introduction of the act.

As noted above, the legislation doesnt just reinstate rights for dealers being terminated in the bankruptcies, but also those who have been invited to continue on. Word from dealers slated to go forward with Chrysler and GM is that the new franchise agreements theyve been offered are fraught with onerous franchise obligations that they didnt have before and could be difficult, if not impossible, to meet.

Shortly after the Supreme Court lifted its stay of the sale of Chrysler to Fiat this week, the bankruptcy judge wasted no time ruling on Chryslers motion to terminate the 789 dealers in its U.S. network the OEM announced only a month ago. GM, which is engaged in its own bankruptcy reorganization, is going forward with a stated plan to accomplish dealer terminations by the end of 2010, although terminated GM dealers have been told they will receive no more new vehicles going forward.

Congressman Van Hollen assembled a media conference on the lawn of the Capitol this week with the original sponsors that included Rep. Hoyer and Maryland House Republican Roscoe Bartlett. Besides Mr. Fitzgerald and Ms. Darvish who had speaking parts at the conference, was a crowd of dealers and dealer association representatives who came out for the announcement of the legislation that already has 72 co-sponsors.

NADA and the U.S. network of state and metro associations affiliated with the Automotive Trade Associations (ATAE) are behind the legislation and are actively rallying members of the

House and Senate to come on board. While there has been concern for dealer rights expressed by senators, no companion bill as yet has been introduced in the Senate.

Besides WANADA leaders Darvish and Fitzgerald being on hand at the press conference, there were dealer leaders from MADA and VADA in attendance along with leadership from NADA, AIADA and NAMAD.

At this writing, Congressman Gerry Connolly (D-VA) from Northern Virginia is onboard with HR 2743 with WANADA working to bring on Reps. Jim Moran (D-VA) and Frank Wolf (R-VA) from Northern Virginia and Rep. Donna Edward (D-MD) from the Maryland suburbs to round out the Washington area delegation.

Rep. Hoyer said Rep. Barney Frank (D-MA), chairman of the powerful House Financial Service Committee would consider the bill in the next week or so. This legislation says that the dealers contracts should be honored, and closings should be done in accordance with those contracts and state law, Hoyer said, acknowledging that time is of the essence on the bill.

WANADA will keep all dealer members informed of the progress on HR 2743, here in the weekly WANADA Bulletin and via special Bulletin alerts.