Chrysler will help dealers facing closure dispose of their inventory and other assets beyond the June 9 deadline the company has set, Sen. Kay Bailey Hutchison said Thursday after talking to the bankrupt automaker's president, James Press.
"Mr. Press said that they will certainly continue to help until every part of this transition of this inventory is disposed of and the help will be there after June 9, that was the assurance that was given," she said on the Senate floor.
Hutchison, a Texas Republican, made the announcement after spending much of the day trying to add a provision to a pending war funding bill that would have forced bankrupt Chrysler help the 789 dealers facing closure get more time to dispose of their inventory.
In a hastily drafted letter to Hutchison, Press said the dealers would "receive a fair and equitable value for virtually all of their outstanding vehicle and parts inventory."
He also said the dealers would "receive a daily report which specifically outlines each unit of inventory and its place in the transition process." The letter did not include a specific assurance about helping the dealers after June 9.
But Hutchison said she called Press for clarification.
"We will know in two weeks if the good faith that is represented in this letter is in fact implemented," she said, adding that the recent infusion of taxpayer cash into auto financing giant GMAC would help the remaining dealers pay for acquiring the inventory.
"That is probably one of the most important components here, because there had to be a lending source for the new dealers to absorb the new inventory," Hutchison said. GMAC serves both GM and Chrysler dealers.
She said Chrysler also told her the automaker would address concerns about inventory financing before the June 9 deadline.
The U.S. automaker initially said after announcing its plan to shut dealerships that it would not buy back any new vehicles, tools or parts from terminated dealers but would assist in finding buyers, sparking outcries from dealers and lawmakers.
The amendment she had filed would have prevented the U.S. Treasury Department from aiding any car manufacturer that has not provided at least 60 days to dealerships to cease operations and sell off inventories.
Hutchison was trying to attach her amendment in the Senate to a must-pass bill to fund the military in Iraq and Afghanistan. No such provision was included in the measure that passed the House of Representatives last week.
A primary concern was to avoid interfering with Chrysler's emergence from bankruptcy protection. The Senate Commerce Committee plans to hold a hearing on the dealer closures June 2, Hutchison said.
Chrysler decided to close hundreds of dealerships, arguing that it needed a smaller network to be profitable. In 2008, it sold about 1 million new cars at some 3,300 U.S. dealers.
Some dealers are challenging Chrysler's plan to sell itself to a new company that will be owned by its union, Italy's Fiat and the U.S. government.
Dealers say Hutchison's effort was aimed at preventing further harm to the economy.
"Forcing these dealers to liquidate their vehicle inventory, parts supplies before June 10, and requiring them to lay off their employees in a careless and disorderly manner will cause additional economic harm both locally and nationally," the National Automobile Dealers Association said.
General Motors said last week that it would drop about 1,100 of its smaller and less profitable dealerships by letting their franchise agreements expire when they come due in October 2010.
Another 470 dealerships will be shut as GM cuts its Saab, Hummer and Saturn brands. The plan is for GM to end up with about 3,600 showrooms by the end of next year.
