Questions, frustrations build over dealership closures

An update on auto dealership closures left many House Commerce and Labor Committee members with unanswered questions. 

Alyssa Schlander, director of government affairs for the Minnesota Auto Dealers Association, told committee members that the dozens of dealerships that were suddenly cut off by Chrysler and General Motors earlier this year are still in limbo, awaiting news on what will happen to their businesses. (Watch the meeting.)

In October, committee members learned that 60 dealerships in Minnesota unexpectedly received termination notices from the bankrupt automakers, effectively shuttering their businesses. Dealers complained that the terminations, which were illegal under state law but permitted under the terms of Chrysler and GM's bankruptcy agreements, were done unfairly and without regard to the dealerships' economic viability.

According to Schlander, an effort to make the automakers reinstate or compensate the terminated dealerships stalled in Congress; however, federal legislation is expected in the next few months that will give the dealers the right to pursue arbitration.

"At the end of the day, we didn't get the automatic reinstatements or compensation that we were seeking... but we hope the process that's laid out in the federal arbitration statute will be a fair one," Schlander said.

Jeff Perry, state government relations director for GM, faced polite-but-firm questioning from committee members over why his company was shutting down profitable dealerships in Minnesota.

Committee Chairman Rep. Joe Atkins (DFL-Inver Grove Heights) asked Perry why GM was terminating dealerships only to invite others to come in and take their place. Perry responded that he was not familiar with the rationale behind GM's decision.

"It's a fair question," Perry said, "I don't know what the reasoning would be."

Rep. Jim Abeler (R-Anoka), whose district includes one of the terminated dealerships, urged Perry to take home a message to his superiors at GM.

"Would you just treat people with the respect that you would hope they treat you with?" Abeler said.