US congressional leaders have pressured General Motors and Chrysler to resolve complaints about dealer franchise terminations the two Detroit-based automakers pushed through during their brief government-funded Chapter 11 bankruptcies.
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A top senate Democrat, Richard Durbin, and his counterpart in the House of Representatives, Steny Hoyer, organized a series of closed door Capitol Hill meetings attended by senior aides, the Obama administration and dealer groups, Reuters reported.
“While I have not foreclosed the option of supporting a legislative solution to address these concerns, I believe very strongly that these issues can and should be resolved outside of the legislative process,” Durbin wrote in a recent letter to the chief executives of GM and Chrysler.
GM plans to drop 1,300 dealers by 2010 and Chrysler has already cut 789. Both companies’ plans were approved by bankruptcy courts.
Hundreds of dealers that have lost or are losing business with GM and Chrysler have looked to Congress to help them win back their franchise rights, which they contend were violated in bankruptcy court, the report said.
GM, now 60% government-owned, has said it is compensating businesses, many of them family-owned, that no longer will sell their vehicles and could pay up to $600 million to terminated dealers. Several dozen avoided closure after appealing to the automaker.
Chrysler, now controlled by Fiat , did not permit dealers to appeal and offered tougher closure terms.
Neither company would talk to the news agency about proposals made at the meetings.
“As part of the dramatic restructuring of all aspects of its business, GM fully recognises the painful sacrifices dealers are also making,” GM spokesman Greg Martin told Reuters.
Chrysler said the issues were difficult but the company would continue talking.
