Sen. Bond co-sponsoring bill aimed to help GM, Chrysler dealers

Missouri U.S. Sen. Christopher “Kit” Bond will co-sponsor legislation aimed at establishing an arbitration process for dealerships who lost franchises following bankruptcy filings from General Motors and Chrysler.

Bond said the arbitration process would help restore the rights of auto dealers selected to be shut down.

Earlier this year, GM and Chrysler filed for bankruptcy to restructure their operations in exchange for about $80 billion in taxpayer assistance. Bond said although the restructuring was a critical step toward ensuring the long-term viability of the companies, he was concerned about how the Obama Administration and the automakers executed the restructuring changes and treated auto dealers.

“Over the past several months, I personally spoke with many Missouri dealerships and I am very troubled by their stories,” Bond said.

In the wake of bankruptcies, Chrysler closed almost 800 dealerships last summer and GM plans to shut down about 1,300 by October 2010. The automakers recently ended talks with dealers contesting their plans to close dealerships in favor of a binding review process for dealerships closed or targeted for closure.

In recent weeks, two area dealerships — W-K Chevrolet in Cole Camp and J.E. Cadle Chevrolet in Versailles — announced plans to close after GM announced it would pull their franchise licenses in 2010. While neither dealership intended to battle for reinstatement through the arbitration process sought through the Senate bill, both acknowledged the legislation signaled a positive step for other dealers facing closures.

“I think the arbitration is a good opportunity for dealers to get a second look by GM,” said Ken Weymuth, owner of W-K dealerships in Cole Camp and Sedalia.

Weymuth does not intend to go through the arbitration process if the bill is adopted because he was able to maintain the employees, equipment and inventory from the Cole Camp store, which will all move to the Sedalia location.

Weymuth said the bill would provide the greatest benefit to Chrysler dealers shut down in the wake of bankruptcy restructuring because those dealerships were only given 30 days notice before closure while GM dealers learned they would have to close by next October.

Although he said dealers may have been overpopulated in some rural areas, Weymuth welcomed the legislation for providing smaller owners a chance for reinstatement.

“We lost any power and rights we had when they were in bankruptcy,” Weymuth said. “The natural economy should dictate who stays and who goes.”

Jim Cadle, owner of J.E. Cadle Chevrolet, said the bill was a “big step forward” for dealers facing closure, but he thought the legislation could go further to help rural dealerships.

“The big problem with the bill is that it won’t help people like myself because we are still going under,” Cadle said.

“For the people who want to stay in, if you go through the arbitration and they still reject you, you are gone within seven days,” as opposed to having until October 2010.

Cadle felt dealers who go through arbitration should be given an opportunity to remain open for at least a year to see if they can turn around their businesses. He said criteria for determining whether a dealer would be reinstated should be different from that which led to the original decisions.

“We need rural dealers, and that means we might need to have exceptions to the rules,” Cadle said.

Bond said he was troubled that many family-owned dealerships selected to lose their licenses were profitable and invested personal funds, providing critical jobs and investments to their communities.

“Auto-related jobs form the backbone of American manufacturing and the economy, especially in the Midwest.

And with last week’s breakdown in negotiations between dealers and the auto companies to come up with a fair and transparent process without legislation, I have decided to co-sponsor the Automobile Dealer Economic Rights Restoration Act of 2009,” Bond said.