The U.S. House of Representatives has passed a bill that includes protection for automobile dealers targeted for closure by General Motors and Chrysler. The Fiscal Year 2010 Financial Services and General Government Appropriations Bill is part of the Omnibus Appropriations Conference Agreement, and the Financial Services portion of this $446.8 billion omnibus spending bill, H.R. 3288, is $24 billion.
The dealer protection provisions create an arbitration process under which the arbitrator must examine the economic interests of the dealerships, the company and the public when considering reinstatement of the canceled agreements. Earlier this year, GM announced it would close around 1,100 dealerships, and Chrysler announced it would close around 800.
According to House Majority Leader Steny Hoyer, D-Md., although it’s important that GM and Chrysler succeed, "We also want to make sure they have distributors so our constituents can buy cars and get them serviced close to their homes."
House leaders say that the aim of the legislation is to provide those dealerships that feel they were arbitrarily terminated the opportunity to demonstrate that they are profitable.
The factors to be considered by the arbitrator would include:
• The covered dealership’s profitability in 2006, 2007, 2008 and 2009
• The covered manufacturer’s overall business plan
• The dealership’s current economic viability
• The dealership’s satisfaction of the performance objectives established pursuant to the applicable franchise agreement
• The demographic and geographic characteristics of the covered dealership’s market territory
• The dealership’s performance in relation to the criteria used by the covered manufacturer to terminate, not renew, not assume or not assign the covered dealership’s franchise agreement
• The length of experience of the covered dealership
More information:
• View the entire text pertaining to the protection for auto dealers
• Employees of Closed Chrysler Shop Get Second Chance Under New Ownership
