Rather than shut down dealerships, Lee says, let market forces consolidate them
Rep. Chris Lee (R-26) is asking the government to step in and help save dealerships -- or at least the jobs they represent -- that have been slated for closure by Chrysler and General Motors.
In a statement, Lee said " the rapid and potentially disorderly elimination of thousands" of dealerships could put 150,000 people out of work.
Lee is asking the Treasury Administration's Auto Task Force to instead implement a plan that would allow for "market forces " to consolidate dealerships.
According to Lee's statement, "More than 60 members of congress, both Republicans and Democrats from districts all over the country, signed on in support of the letter.
Full press release after the jump.
Press Release:
WASHINGTON – Congressman Dan Maffei (D-NY) and Congressman Chris Lee (R-NY) are leading the effort to save local auto dealership jobs. Maffei and Lee wrote a letter to the Treasury Administration’s Auto Task Force, headed by Mr. Steven Rattner, to request the Task Force reconsider the forced closure of dealerships across the country in favor of a more flexible and transparent process that would allow for market forces to consolidate dealerships. More than 60 members of congress, both Republicans and Democrats from districts all over the country, signed on in support of the letter.
Congressman Dan Maffei said: “We all recognize that the economy is not favorable to the auto industry right now. We’ve seen layoffs from manufacturers and we expect to see more dealerships consolidate and close this year. However, forced closure of arbitrary dealers will not necessarily help automakers, and it certainly will not help our local economy. We are asking the Task Force to hold off on forced closures and allow more time for smarter consolidation and attrition of our local dealerships. These dealerships employ hundreds of people across our area in good-paying jobs, they sponsor our little league teams and our pancake breakfasts, they have been an integral part of our community for generations -- and all we are asking for is that they be allowed to make the best decisions possible for their businesses.”
Congressman Chris Lee added: “Hundreds of good-paying jobs in Western New York are tied to the future of local dealerships, and we can’t afford to lose them due to hasty decisions made in Washington. In many cases, dealerships are small, family-owned entities that are deeply connected to the communities they serve. We have asked the auto task force to take a long, hard look at this issue to ensure an open and transparent process that is fair to both the dealers and their customers.”
Bailey Wood, a spokesman for the National Automobile Dealers Association (NADA), commended this action by Congress: “Representatives Maffei, Lee and more than 60 of their colleagues recognized the important role that neighborhood auto dealers play in their communities. With the local auto dealer as the largest private employer in many small towns, the rapid disruption in the local job market will have an even greater negative impact on the local economy. A more balanced and fair approach to the inevitable consolidation of dealerships will be better for all parties, and we strongly encourage the Auto Task Force and President Obama take heed of the suggestions made in this letter.”
A copy of the letter is below. A list of those Members who co-signed the letter will be released shortly.
The Honorable Steven Rattner
Counselor to the Secretary of the Treasury
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Mr. Rattner:
We are writing to express our serious concerns regarding the decision by the Auto Industry for the rapid and potentially disorderly elimination of thousands of Chrysler and General Motors dealerships. This action, if implemented, could put approximately 150,000 people out of work. Since these dealer reductions and its ripple effects would have a serious and adverse impact on the United States, we would like to ask you to inquire with the companies about their rationale for revoking franchise agreements with thousands of dealerships.
To justify these job losses, GM and Chrysler are apparently relying on a misperception that new car dealers create a cost burden to auto manufacturers. This is not true, on average reportedly almost all of an automaker’s revenue comes from dealers purchasing the automakers’ vehicles. Far from saving money, a rapid reduction in dealerships could very likely reduce GM’s and Chrysler’s revenue and market share.
Automobile dealers are one of the largest private sector employers in the United States, providing tens of thousands of local jobs and contributing millions of dollars in tax revenues to states. Auto dealers are anchors in communities throughout the country and many times ownership is passed down from generation to generation. In addition many auto dealerships are minority owned and have traditionally provided strong local community support. Each dealership creates an average of 52 neighborhood jobs and these positions typically pay twice the national average as other retail-sector jobs. Dealers have invested about $233 billion to create an auto sales network that provides a vast distribution and service channel for consumers. In fact, automakers created the franchise dealer network specifically to lower their costs, as they outsource virtually all costs associated with selling and servicing cars.
Last year, over a thousand auto dealers closed their doors for good. Further thinning of the dealer ranks through normal market, dealer-driven consolidation, and other forces is inevitable. The action being proposed has not taken into effect the impact on communities and workers, and without any evidence that massive and immediate dealer reductions are necessary to restore the financial health of GM and Chrysler.
We appreciate the enormity of the mission your Task Force has undertaken to help the auto industry. However, we are concerned the reduction of dealerships, at a time when the national unemployment rate is rising, is counterproductive policy. We respectfully request that the Auto Task Force urge the companies to provide more transparency and justification on forced dealership closures, revisit their decision and consider the damaging effects on local communities.
Sincerely,
______________________________
Daniel B. Maffei
Member of Congress
______________________________
Christopher J. Lee
Member of Congress