By on June 18, 2009

HR 2743 IH

111th CONGRESS

1st Session

H. R. 2743

To restore the economic rights of automobile dealers, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

June 8, 2009

Mr. MAFFEI (for himself, Mr. KRATOVIL, Mr. VAN HOLLEN, Mr. HOYER, Mr. MCMAHON, Ms. SUTTON, Mr. BARTLETT, Mr. HALL of New York, Mr. POSEY, Mr. HEINRICH, Mr. PAULSEN, Ms. SHEA-PORTER, Mr. MANZULLO, Mr. DEFAZIO, and Mr. DAVIS of Alabama) introduced the following bill; which was referred to the Committee on Financial Services


A BILL

To restore the economic rights of automobile dealers, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Automobile Dealer Economic Rights Restoration Act of 2009’.

SEC. 2. FINDINGS.

The Congress finds the following:

(1) Automobile dealers are an asset to automobile manufacturers that make it possible to serve communities and sell automobiles nationally.

(2) Forcing the closure of automobile dealers would have an especially devastating economic impact in rural communities, where dealers play an integral role in the community, provide essential services and serve as a critical economic engine.

(3) The manufacturers obtain the benefits from having a national dealer network at no material cost to the manufacturers.

(4) Historically, automobile dealers have had franchise agreement protections under State law.

SEC. 3. RESTORATION OF ECONOMIC RIGHTS.

(a) In order to protect assets of the Federal Government and better assure the viability of automobile manufacturers in which the Federal Government has an ownership interest, or to which it is a lender, an automobile manufacturer in which the Federal Government has an ownership interest, or which receives loans from the Federal Government, may not deprive an automobile dealer of its economic rights and shall honor those rights as they existed, for Chrysler LLC dealers, prior to the commencement of the bankruptcy case by Chrysler LLC on April 30, 2009, and for General Motors Corp. dealers, prior to the commencement of the bankruptcy case by General Motors Corp. on June 1, 2009, including the dealer’s rights to recourse under State law.

(b) In order to preserve economic rights pursuant to subsection (a), at the request of an automobile dealer, an automobile manufacturer covered under this Act shall restore the franchise agreement between that automobile dealer and Chrysler LLC or General Motors Corp. that was in effect prior to the commencement of their respective bankruptcy cases and take assignment of such agreements.

(c) Except as set forth herein, nothing in this Act is intended to make null and void:

(1) the court approved transfer of substantially all the assets of Chrysler LLC to New CarCo Acquisition LLC; or

(2) a transfer of substantially all the assets of General Motors Corp. that could be approved by a court after the date of introduction of this Act.

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14 Comments on “Automobile Dealer Economic Rights Restoration Act of 2009...”


  • avatar
    cnpota

    Voted. Dealers finally have some official help. But change “Federal Government” to ‘American People, through the generosity of the People’s Republic of China’ for accuracy.

    By the way, is this a back-door federalising of dealer networks?

  • avatar
    grog

    So, basically the House is stepping in to de facto enforce the states’s franchise laws. I know, it’s not the same in the details but the end result is the same: bankruptcy allowed the car company to do an end-around the franchise laws–Congress then passes a law to effectively prevent that from happening.

    It’ll be interesting to see how the votes fall on this one. I’m guessing that political ideology will fall by the wayside in the interest of “how I can tell my constituents I saved 30 Chrysler dealerships in my district.” That mentality knows no party.

  • avatar
    Axel

    Further down the rabbit hole…

    Next up, Congress will allocate funds to GM and Chrysler to pay for meeting the now-bankruptcy-proof dealer obligations they have.

    Since they can’t possibly pay the money back, the government will convert debt into equity and enact a wholesale takeover of both companies.

    Since the companies still will be hemorrhaging billions of dollars a month, the government will tariff the s**t out of any vehicle made by a “foreign-owned” auto company. They’ll also find some back-door way to ding Ford.

    Not sure what the end game is, but I think it involves all of us working for the Federal government, being paid in “production vouchers” exchangeable for finely-made, quality American goods.

  • avatar
    xyzzy

    It’ll be interesting to see if any supporters of this bill also decried the administration’s manhandling of secured creditors in bankruptcy court. They said it was an interference with long-established bankruptcy procedures. And this is…. what?

  • avatar
    thalter

    It is very difficult to read this with a straight face.

    Asset to manufacturers? Dealers are a big part of the problem, and why people hate the car buying process so much.

    Provide essential service? They sell effin cars, not groceries. Most people buy a new car, what, every three or four years? Is it really that big of a hassle to go to the next dealer over?

    No material costs? Other than the cost to the brand by having hole-in-the-wall dealers who can’t afford decent facilities, and shifty dealers who have to screw the customer because they don’t have enough volume to turn a profit legitimately.

  • avatar
    rochskier

    Not sure what the end game is, but I think it involves all of us working for the Federal government, being paid in “production vouchers” exchangeable for finely-made, quality American goods.

    Everything will be fine as long as there is a steady supply of Victory Gin and the chocolate ration is increased to 20 oz. from 30 oz. in the preceding month.

  • avatar
    Lumbergh21

    They’ll also find some back-door way to ding Ford.

    Is Ford getting any of the retooling money that was in the Energy Bill??

  • avatar
    motownr

    The reason for this proposed legislation is that legislators on both sides of the aisle finally had the chance to verify that the whole ‘dealer reduction’ gambit was a fraud masquerading as ‘normal bankruptcy’ business.

    In many ways, it was a way for scores to be settled. The administration allowed it because dealers are not a key constituency. The factory execs allowed it because many of them were already in the process of leaving (e.g., Nardelli, Press; Landry et al to Penske/Saturn).

    If you had a chance to watch the testimony of Henderson and Press, it was clear that they both were carefully selecting their words to avoid charges of misleading Congress, albeit for different reasons. Press, for the treatment of terminated dealers; Henderson for the quiet squeeze GM was putting on dealers to amend their franchise agreements or be terminated under chapter.

    It’s equally clear that few bought their explanations.

  • avatar
    Monty

    Hmmm…

    Close your eyes.

    What do you see?

    That’s how much sympathy I have for GM dealers.

    This is just political grandstanding by Congress – “gonna slap that bitch upside the head”. No politician ever makes decisions based on the common good; it’s all about repaying favours, getting re-elected or exacting revenge on members or supporters of the other party.

  • avatar
    Axel

    Imagine how much better this country would be WITHOUT GM, WITHOUT Chrysler, WITHOUT auto dealers, WITHOUT Democrats, and WITHOUT Republicans.

    Imagine a world in which manufacturing firms made this funny thing called “profit” by making products that people like so much, they are willing to buy them for more than they cost to make. Imagine factory workers making a living by providing a useful service towards that profit, not because they were entitled to it by fiat.

    Imagine a world in which we bought the product we wanted to buy at a fair price – the same price everyone else pays – without being pushed around by sociopathic sales demons who attempt to “trick” you into buying something you don’t want at a price you shouldn’t pay?

    Imagine a world in which laws made sense and served the greater good, and weren’t all cynical pandering to whatever voting bloc or interest group helped get you elected.

    Wouldn’t that be great?

  • avatar
    ruckover

    Axel–great post, and it is even better when you sing it in a John Lennon voice.

  • avatar
    ray_g

    This seems just like the long running problem of the military trying to close unneccessary bases, but can’t because some Congress person always screams bloody murder about closing one in their district. So much for no political interference with company operations. Following the example of the base closing problem, I guess we will now need a special commission to decide which dealerships can be closed.

  • avatar
    smithrobjr

    Newsflash…miliatary bases are branches of the government, that cost money of the government. Car dealers are NOT OWNED by the factory. Dealers own the land, buildings, etc. They sell a product offered by a manufacturer.

    So what if they want to offer Dell & HP???? That’s what this really is. Manufacturers don’t want customers to shop and compare, they want dependent dealers, on one product, consumers be damned. Customers deserve better.

    My new favorite is Fritz Henderson telling congress they will save money when they don’t have to pay for the prep of cars, or the gas fill up…huh? The prep is paid to the dealer by the manufacturer because 50 years ago Congress said that cars HAD to be prepped to make sure they were safe…it does with the CAR! Same with the gas, who sells is doesn’t matter, it goes with the car.

  • avatar
    DealerEmployeeNJ

    Its a shame that some people who commented on here really have NO IDEA what Dealers mean to their communities. We are NOT owned by GM. Our Building, Land, Taxes, etc. are OWNED and PAID by the Dealer… that same dealer provides anywhere from 30-100 jobs in that community in which he/she resides. Take EACH Dealer that just GM is closing down: That is 2400 Dealers in the USA. Lets say for estimate purposes that each dealer employees 20 people in that town. That is 72,000 jobs LOST in AMERICA. Last time I checked, this was America. We need to support our local communites and KEEP jobs in America, not throw people out on their asses. The estimated proposed job loss for Chrysler & GM is approx 200,000 jobs LOST… this does not include the small businesses which these dealers support such as parts stores and local repair shops that we sell parts to. Most dealers being shut down have been family owned and operated for over 30 years… 50 years… some as long as 94 years! These are families with long time employees. IF this bill HR2473 is passed AND the Companion bill S1304 is passed, it will restore the rights of these dealers so that they can fend for themselves and SAVE their employees jobs.

    http://www.hometownautodealers.org

    This website was formed by the: Committee to Preserve Dealer Rights.

    You can check out that website to find out how to contact your local Senators and Congressmen/Congresswomen to tell them that you support this bill.
    It would be an absolute SHAME that people in AMERICA would not support the potential to save HUNDREDS OF THOUSANDS OF JOBS…


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