{
  "id": "R40712",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R40712",
  "active": true,
  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
  "versions": [
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      "source": "EveryCRSReport.com",
      "id": 372422,
      "date": "2010-01-08",
      "retrieved": "2016-04-06T22:23:19.986666",
      "title": "U.S. Motor Vehicle Industry Restructuring and Dealership Terminations",
      "summary": "As Chrysler and General Motors (GM) moved toward and into bankruptcy, they received permission from the U.S. Bankruptcy Court to terminate about 2,000 contracts with auto dealers. Many of the dealers want their contracts reinstated and have sought relief from Congress. This report examines the changed economic landscape facing the auto sector, automaker arguments in favor of dealer reductions, and dealer counterpoints. It also highlights recent legislation introduced to address dealers\u2019 concerns.\nChrysler and GM have emerged from bankruptcy as significantly smaller companies, reflecting the end of a multiyear restructuring process for both companies. Chrysler is controlled by the Italian carmaker, Fiat, while GM\u2019s majority owner is the U.S. government. GM, which in 2008 operated 47 assembly, powertrain, and stamping facilities, will operate 34 plants by the end of 2010 and 33 by 2012. The number of hourly employees will have declined from 78,000 on December 31, 2007, to 62,200 at end-2008, to an estimated 40,000 in 2010. By way of contrast, GM had 304,000 hourly workers in 1991. GM also discontinued two brands (Pontiac and Saturn) and is to sell Hummer and Saab. The new Chrysler reduced its number of production facilities from 25 to 17 as part of its restructuring. The company employed 45,000 hourly U.S. employees in January 2008 and 27,000 in February 2009. For the first time, GM and Chrysler are not owned by private investors; rather, the UAW\u2019s retiree health trust owns 17.5% of GM and nearly 68% of Chrysler; the U.S. Treasury owns nearly 61% of GM and 10% of Chrysler and the Canadian and Ontario governments own nearly 12% of GM and about 10% of Chrysler. In addition, bondholders and creditors own 10% of GM. Fiat holds a 20% stake in Chrysler.\nThe auto dealership network, a critical intermediary between automakers and final consumers, has not escaped this turmoil. Auto dealers are independent businesses with contracts with the automakers. Most of the approximately 20,000 U.S. auto dealers are family-owned and have been in business in their hometowns for decades. As with all stakeholders in GM and Chrysler, the dealer owners are faced with stark choices as the automakers downsize and seek a more competitive business model. As part of their restructuring, Chrysler cut 789 dealers immediately and GM is to eliminate more than 1,300 when the dealer\u2019s contracts expire in October 2010. \nWhile dealer reductions of this magnitude would not have been possible in the normal course of business, the bankruptcy court approved both the Chrysler and GM requests to terminate dealerships as part of larger processes that have allowed a new GM and a new Chrysler to emerge from bankruptcy with many fewer assets and liabilities. Of the roughly 2,000 affected dealers, many oppose the changes and took their battle against GM and Chrysler to Congress. Congressional hearings were held and a number of bills to restore the dealer terminations were introduced, including H.R. 2743, H.R. 2750, H.R. 2751, H.R. 2793, and H.R. 2796. In July 2009, the House passed the Financial Services and General Government Appropriations Act, 2010 (H.R. 3170), which included a committee-approved amendment that would require automobile companies that receive federal funds and are partially owned by the federal government\u2014that is, GM and Chrysler\u2014to reinstate agreements with franchise dealerships that had a valid dealer agreement prior to Chapter 11 proceedings. This provision was modified significantly during a conference with the Senate and ultimately included in the FY2010 Consolidated Appropriations Act (P.L. 111-117). The new law provides a binding arbitration process for terminated GM and Chrysler dealers who would like to be reconsidered and reinstated. Other legislation affecting dealers includes H.R. 1606, H.R. 2224, H.R. 3088, S. 1253, S. 247, and S. 1135. This report will be updated as necessary.",
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    },
    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc811554/",
      "id": "R40712_2009Aug07",
      "date": "2009-08-07",
      "retrieved": "2016-03-19T13:57:26",
      "title": "U.S. Motor Vehicle Industry Restructuring and Dealership Terminations",
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  "topics": [
    "Appropriations",
    "Economic Policy"
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}