House bill won't save all GM dealerships

Cars at Martin Cadillac in Yonkers, N.Y.

TEXT OF STORY

Steve Chiotakis: The House yesterday -- the U.S. House -- passed a $1.1 trillion spending bill. It heads to the Senate next week. There's $500 billion for Medicare, another $100 billion for veterans, and a little measure to help the 2,000 or so dealerships being closed by GM and Chrysler. From Washington, Brett Neely reports.


Brett Neely: When General Motors went into bankruptcy this spring, the company said closing small and overlapping dealerships would save $2.5 billion a year. But the decision had political consequences.

David Cole is with the Center for Automotive Research:

David Cole: What the dealer closures did is brought home the travails of the auto industry to the average community.

Car dealers are often important local businesses who give to charities -- and members of Congress. The dealers went to Capitol Hill to stop the process.

But they won't be getting exactly what they wanted, says auto consultant Alan Baum. Instead, the legislation makes the carmakers and dealers meet with an arbitrator. The arbitrator will decide whether some dealers slated to close get a reprieve.

Though it looks like a win for the dealers, Baum says in the end, it's not.

Alan Baum: The agreements that have been worked out have been set in such a way that the number of dealers that will actually be brought back to life, so to speak, is relatively modest.

He says GM and Chrysler will get to hold onto most of the savings they had planned for.

In Washington, I'm Brett Neely for Marketplace.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...