NADA Applauds Congressional Efforts to Restore Dealer Rights


WASHINGTON (June 10, 2009) - The National Automobile Dealers Association (NADA) supports H.R. 2743, the “Automobile Dealer Economic Rights Restoration Act,” legislation that would restore the economic rights of auto dealers under state franchise laws.

The following statement was provided by NADA President Phil Brady at press conference today in support of the bill-sponsored by Reps. Daniel Maffei, D-N.Y., and Frank Kratovil, D-Md.-which restores the economic rights of all Chrysler and GM dealers under state franchise laws:

“Yesterday, almost 800 Chrysler dealerships were unnecessarily forced to close their doors. The treatment of these dealers and their 40,000 employees-people whose jobs are in jeopardy-has been unconscionable. These businesses, many of which have been around for decades, were given less than four weeks to wind down their operations and sell off their parts and vehicle inventories. These loyal dealers and the more than 1,300 who are being shuttered by GM along with their employees have had their lives shattered by these decisions. The truth of the matter is that closing dealerships will not make either GM or Chrysler more viable.

“There is a very clear misperception that the franchise dealer network imposes costs on automakers.  In reality, dealers actually absorb the massive distribution costs that carmakers would otherwise have to take on. Dealers are independent entrepreneurs who risk millions of dollars to buy the land, build the buildings and purchase the vehicles from the automakers. Dealers significantly reduce the costs necessary to bring the manufacturers' products to market while simultaneously providing consumers with convenient and competitive sales, service and financing options.

“With each dealership employing on average 52 people, more than 100,000 people have had their livelihoods threatened by GM and Chrysler dealership closures. Adding more people to the unemployment roll will not aid the nation's economic recovery.

“Reducing the number of dealers will also have a profound impact on the consumer. Fewer dealers means less competition for consumers. At a time when many Americans are struggling to make ends meet, raising the cost of a new-vehicle purchase makes even less sense. Vehicle owners will also find it more difficult, more expensive and less convenient to get their vehicles serviced and repaired.

“These closings are unnecessary and wrong. We applaud the congressional efforts to restore dealer rights and hope for prompt consideration of this legislation.”

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