NADA Welcomes Congressional Oversight of Dealership Closures

Dealer Group Acknowledges GM's Improvements to Participation Agreement

WASHINGTON, June 12 /PRNewswire-USNewswire/ -- Following his testimony before
the U.S. House Energy and Commerce Subcommittee on Oversight and
Investigations, John McEleney, Chairman of the National Automobile Dealers
Association (NADA) and a multi-franchise dealer from Iowa, issued the
following statement:

"NADA welcomes the engagement of this subcommittee which has a long history of
aggressive congressional oversight. Oversight is exactly what is needed due
to the lack of transparency and the harsh treatment of dealers during the
government-sponsored restructuring of both Chrysler and General Motors.

"GM is closing 1,350 dealerships. Chrysler, through the bankruptcy courts,
just shuttered 789 franchises. Between them, these closings put more than
100,000 jobs at risk, in communities throughout the country. With
unemployment at its highest rate in more than 25 years, eliminating jobs and
closing community businesses is not the way to help a struggling economy.

"Everyone agrees that both Chrysler and GM need to decrease costs and increase
revenue to survive, but eliminating dealerships does neither. Dealers cost an
automaker almost nothing. They are independent entrepreneurs who risk
millions of dollars to buy the land, build the buildings and purchase the
vehicles and parts from the automaker. Terminating dealerships only cuts into
an automakers' revenue, jeopardizes market share without making either company
any stronger.

"We learned recently that it was the federal government that required these
closures. Ron Bloom of the Automotive Task Force acknowledged to the Senate
this week that the Task Force required both Chrysler and GM to be "more
aggressive" regarding dealers.

"We do not see how cutting dealerships and jobs makes economic sense -- not
for Chrysler, not for General Motors, not for local communities and certainly
not for the struggling U.S. economy.

"I would also like to comment on the status of the GM agreements, both the
Participation Agreements for those dealers going forward and the "Wind-Down"
Agreements for closing franchises. During the Senate Commerce Committee
hearing last week, NADA voiced serious concerns about the extremely one-sided
Participation Agreements delivered to the 4,000 dealers of the new GM.
General Motors executives responded to these concerns promptly and, after a
very frank discussion, made significant improvements to the Participation
Agreement. Additionally, the company has committed to clarify some of the
terms of the Wind-Down Agreements for the terminated dealerships.
Furthermore, we appreciate GM's willingness to continue to work with NADA on
these crucial matters.

"We remain concerned, however, because these government-negotiated
bankruptcies continue to threaten dealer rights under state motor vehicle
franchise laws. These laws inject balance in the inherently unbalanced
economic relationship between a dealer and the manufacturer. To fix this
problem, Congress should insist that the franchise laws of the 50 states apply
with full force and effect by passing H.R. 2743, the Automobile Dealer
Economic Rights Restoration Act of 2009."

Click here for McEleney's full oral testimony.

http://www.nada.org/NR/rdonlyres/570C5392-FECF-46E0-8160-3D93C6B31571/0/McEleney_Oral_Testimony_061209_Final.pdf

SOURCE National Automobile Dealers Association

David Hyatt, Vice President, NADA Public Affairs, +1-703-821-7120,
dhyatt@nada.org, or Bailey Wood, NADA Legislative Affairs, +1-202-547-5500,
+1-202-557-1674 (mobile), bwood@nada.org