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House of Representatives Bill Reverses GM, Chrysler Dealer Cuts

07/17/2009
The U.S. House of Representatives has passed a spending bill that includes a measure to reverse approximately 2,100 dealer shut-downs by General Motors (GM) and Chrysler. The Associated Press (AP) reports that the measure goes directly against the Obama administration, which included the dealer closings as requirements for the companies' government funding. Car dealers have lobbied their local representatives to support the measure, saying that the closings could put more than 200,000 people out of work. GM and Chrysler are opposed to the legislation and argue that being forced to restore franchise agreements with these dealers will slow down their turnarounds. Peter Grady, a Chrysler vice president quoted by AP, says the move "flies in the face" of a declining U.S. vehicle market. House members who voted for the measure say it will force the auto companies to compromise with the dealers who are opposing their closures. According to Representative David Obey, a Wisconsin Democrat and chair of the Appropriations Committee, the measure will prevent "some signficantly profitable auto dealers at the local level being put unnecessarily out of business." On the opposing side, Representative John Dingell, a Michigan Democrat, tells AP the measure is dangerous to the industry: "If the auto industry goes down because we have taken sides in a quarrel between the auto industry and the dealers, we will have destroyed not only the dealers that complain, but all of the other dealers." Senate Majority Leader Harry Reid (D-Nev.) says the issue is not at the top of the Senate's agenda; a spokesperson for Reid tells AP that Senator Charles Grassley (R-Iowa) has introduced a similar measure in the Senate.

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