bankruptcy filing the purchased sale agreement suggested we would have to reduce the total amount of the liabilities by two-thirds. the management had the responsibility to allocate the two-thirds reduction so as part of doing that we identified a plan with respect to the salary, excuse me, executive retirees come any executive retiree whose combined qualified and benefit was less than $100,000 they would be unaffected and to the extent their benefits in total were more than $100,000, the extent of the unqualified plan would be reduced by two-thirds. ..

>> have to be returned to general motors in the trait? >> yes, sir. >> of those dealers going forward or lost, a close, what happens if they don't sign it? >> first of all, 96% as of this morning had either signed it or verbally said it is coming in. we anticipate a high percentage of those dealers will signed those. in the event that they don't

the contracts will not be assumed by the new company and they would be rejected. >> they would be out of business anyway. >> any financial incentives in the wind down the agreement would be lost? >> correct. >> . >> as long as they do not sign that under duress. [laughter] but there are 1,000 more dealers going to be closed so if i don't get my contract in right away or protest too loudly i could be one of the other thousand dealers? >> in terms of participation agreement 99% are in and we expect to have all of them. mr. spencer? >> a couple of comments mr. press i would submit the cost producer will go up after

the dealers are terminated because first of all, may be 40% or so get no representation at all part of it is electronically. there is no personnel. i will also submit they will cut very few field of people with you were dealers those fixed cost will go up. the other comment is the sales responsibility just too quickly educate the committee, they take the state average penetration for their brand and they expect every dealer to hit state average penetration in black of the problem is just to take an exaggerated, and not exaggerated by an example of how that can be skewed to an unfair management it has been

found in ohio and through expert testimony they have thrown out many cases as a criteria, one of the terminated rejected stores in the congresswoman district, there is a dodge dealership in the middle of four country. two ford plants one was shattered but still a lot of residual buyers and living there, retirees and a planned still going. this dealership is right between that. 100 miles to the west is another dealership near a jeep plant in toledo ohio. the dealer in toledo mend my dealership is held to exact the same standard for govett is absurd >> mr. anderson does gmac own

part of the new gm board is gm's still own part of gmac financing? >> tm will own the shares in a gmac. we will own approximately 9.9% wants the other hampshires are in a trust because of our agreement we agreed we would not sell down our interest. >> mr. chairman i just want to pick up, but gmac part. but i have to find it. i have talked to a lot of folks in my district. one of their complaints with gmac, i had a dealers tell me after gmac got the government dollars the immediately raised the interest rate by 6%. they made the dealer paid $10,000 just to be able to stay on, nonrefundable. he had been with them 27

years, the last seven months they changed his contract 14 times always with the threat of curtail and micromanaging and manipulate the floor stock. they told him he had too many cars so he sent them to auction and then they said they had not had an inspection and the card numbers were inaccurate. he said i did what you ask and they said you should call us to tell us that he said it would be eliminated to have a congress man in the room. this is not unique and but what terms of that side of the issue. let me go to mr. thomas. you have now had a brief opportunity, is this the first time you have seen the criteria upon which the decision was made in your wind

down agreement? >> i have seen it one other time the last few weeks. i have seen things in this paper regarding the wind down commitment and it appears i made the wrong decision it says in the case of a rejected dealer. >> what page are you want? >> page number five. is as out the very bottom for gm dealers those that have a plan with gmac unfortunately we are with wells fargo, but for gm dealers that have a plan with gmac of the dealer agreement is rejected we expect the dealer would turn in new vehicle inventory which gm would redistribute. the idea of playing out 17

months sounds good and a sense for the employees, but it is a hard sell to convince someone why they should buy a past model car from new when you are not even going to be there. that is tough. >> is the hard to sell a model car from a manufacturer who people were not convinced was going to be there. >> that as well. >> did that affect your sales? >> it has affected them. >> was that taken into account? >> i think something was taken into account but i don't see it as being sufficient. we took four cars to auction about one year ago, two cadillacs and two corvettes and we lost $65,000 on for automobiles and project that forward, it is not a pretty

picture. >> do you feel disinformation provided to the committee would give you an adequate understanding how they evaluated the wind down agreement vs. the go for agreement? i guess i will let you answer. >> the whole document, i asked specifically for a definition of what would be my fate in the state of rejection? there were really two choices. if you were wind down you could sign of the wind down agreement a tough playing bridge or fall into rejection and node definition of what that meant. >> you did not know the option really? >> i asked for it. >> did you get it? >> i did not get something as thorough as this but rather short answer is.

i had to ask on that e-mail questions ninth, i asked about mr. henderson's comment about redistributing inventory that i think were made in the senate hearings, the e-mail response comes back, you have to call the call center. i call the call center, they don't have information about that comment or its implications. >> mr. henderson, do want to answer his question? reckon the case, first thing the total compensation in the wind down agreement is intended to be superior to termination that is why it is a high percentage. if you voluntary terminate we had 50 dealers last month voluntarily terminate. >> you said 80 on average. >> we had 50 last month and knowing this agreement was there. what happens they floor plan

that cars to gmac it has an obligation an agreement the dealer can turn the car's back and we will be distributed cars. that is how it works. >> if you are with the bank? >> we know how such an agreement it would have to be bank by banks to make the highest percentage hour floor plan with gmac it. >> what does that mean for you mr. thomas? >> i would have to talk to my bank. >> you have an agreement with bank of america or elsewhere go? >> i don't know. this would apply only in the case of the termination as opposed to the wind down and we would continue to work with the dealers through october 10. >> guy realize my time is over but to both gm dealers and wind down, what effect does it have on your ability going forward not to have the new

product line going into the next year? you will still be with a lot? >> we will. we will not have the current offerings. >> how does that help the gm? i do not understand that part. what am i missing? how does them not be able to buy your new model vehicles help the 2010 vehicle? >> first of all, the one element of the wind down agreement is they could no longer purchase of new vehicles they could purchase parts. >> my question is why? help me understand that makes sense purdue make money by selling vehicles. right? they make money by selling the same vehicles. why would you want them buying your 2010 vehicles than it is there problem. right? they go out of business at the end of january.

>> for the purpose of the wind down agreement to we offered incremental resources for the vehicles in inventory it was over a 17 month period to wind down their facility as opposed too repugnant -- replenishing their stock and have a problem at the end of the contract. >> when the model change occurs everything we have will be yesterday's news. it will be very hard to get from october 1, 2009 through october, a 2010. >> that is my point*. i said i felt if he were terminated by mid did your dealership deal terminated? in fact, it is much shorter term provides realize you are buying out but in the fact it is taking effect this fall? >> that is my sense.

>> do you track it the same way mr. blankenbeckler? >> yes. in regard to the handout that was just given out, i could get no information to speak of the in regards to what your fate was should you not sign the wind down agreement from i was repeatedly, repeatedly, repeat edly called where is your agreement? where is your agreement? where is your agreement? 8d understand it? >> i can read. i and a stand what it says. that border the provisions of not signing? you will be rejected. what does that mean? let's talk about a provide to half a lot of paid vehicles icahn for every vehicle i have got and if i can pick up the

phone and say gmac to get $4 million worth of inventory, at which 90 days or right now they are starting to produce 2010. and a business that appears to be going out if this a long leash until october i would like to make one other comment. one of the provisions of the. >> host: agreement i am paraphrasing, states in my case i will produce intentionally 84 years of sales records, my customers' names, a telephone numbers, my service customers and telephone numbers, and i am given 25% of my 8010

money -- wind down money. i get one person, one attorney come to me and say and do appear friday's the purpose of the electronic list of all of my customers are to be used to be given to a third party. that is how i read it for my replacement. what i have earned over 84 years, and both of these people are my personal friends i have to give names and telephone numbers you help me with the federal statute, i am not an attorney but i see this as a huge liability to turn over customer list. you would not go into a doctor's office and go get medical records.

one customers would more than it in a gate. >> giambi one customer that brought an action? >> yes. >> i cannot see how that most not like we have been why do i have to supply my customers' names? everything i do is send electronically every sale that i make, i give you the name, address, you have got them. warranty records, labor operation it is given to them it is like again, all of the data-processing deals they are thrown back on us. we pay for those things. i would like to hear what mr. hendrick would say in response to my fear of a turning over my customer's

identity. >> can he respond? does gm assume of the liability? >> he has a private policy we have excellent experience with being able to properly protect consumer information and our company's history. >> use in the agreement it is given to a third party so then how do have control? >> we have been able to manage overtime. >> who is the third party? >> we have to do the questions from here. sorry. mr. dingell? >> thank you, mr. chairman. >> what is your opinion of gm and chrysler prospective dealer closure plans with regard to substance and procedure? will you please submit your response for the record?

>> both cases they were too deep in terms of numbers. >> would like specific criticism and submit it for the record because they have five minutes and also submit as part of that how can that be improved to result in fairness in your view to the dealers? in the case of both gm and chrysler it was not a transparent process. gm had an appeal but none in the case of chrysler which i think is problematic. with the liberation we have received today the chrysler dealers will be provided that criteria and makes sense there is an appeal process so those dealers that have been canceled can evaluate that in the case mgm the wind down as much more favorable to have the them to sell off parts and

inventory and reasonably close the business in a rational format. in the case of chrysler the wind down was abrupt, 26 days because problems were dealers and employees. >> what does it cost per car for a gm dealer to wind down? how much is he going to use -- loose per car and how much will a chrysler dealer lose per car? >> that is hard to project i have been a dealer 26 years but in gm we get to the tail end, you have the less popular models left dealers could lose several thousand dollars but it depends on their own situation. in the case of chrysler, those dealers that have vehicles left the don't have a franchise or a license or cannot get chrysler

incentives, the cost could be many thousands, of five, six, $10,000 per vehicle. >> what charges are in the two closure plans that are detrimental to the dealers? how could that aspect be improved? >> i do not understand the question is. >> i am not sure i do. [laughter] what is there in the two plans that is particularly hurtful in terms of costs to the dealers? and how could those matters be improved? >> and the case of gm and chrysler when the dealer loses a franchise like these gentlemen here and around the country they lose the value

that goes at the o. >> i want to know the specific charges per car, in other words chrysler has a $350 item that they have to pay. are there other charges like that and either one of these plans that impact upon the dealer? >> not that i am aware but in general motors they do not buy the cars back but give them the opportunity to sell them down over the next 15 months. >> i will submit to you and ladder and other letters submitted i ask unanimous consent mr. chairman, those letters and responses be inserted in the record. >> without objection. >> mr. mceleney to your assertion two ships do not cost of money to maintain than wide to foreign debt transplants have significantly fewer dealerships in the

united states than the domestic competitors. >> i am an emcor dealer as well so i have some perspective. the business model for the transplant manufacturer is quite a bit different than domestics. domestics have a strong market share in the world market like where i live in this be eight to they have a 10. market share advantage. is a competitive a vintage port gm and chrysler to have representative if they have some 5,000 on average or a toyota or honda have no interest they will not backfill these locations that are being closed with a franchise. >> why would they choose not to back those kinds of franchises? that is the root of the question. >> based on my experience i would say they don't see the market opportunity for their brand as they do in more

metropolitan areas. >> mr. press, but mr. henderson, mr. mceleney has indicated the franchisees do not cost manufacturers money to maintain. do agree with this question and agree with his position or do not? >> i do not. >> i do not. >> why? >> and our situation, one of the main reason is that caused our bankruptcy and a week product engineering is a requirement that we provide individual models for each standalone franchise, the sister models that cost substantial amount of money and took resources which in negative sales that is a huge cost. the sec and of course, is lost sales, lost volume in a market

underperforming, those sales don't provide revenue for us. they lose that and it was 1.5 billion dollars, the development of individual models is 1.4 billion. that is a very real situation. third, because we have so many dealers and the average dealer of loses money, we don't have a competitive dealer network that can compete with other manufacturers with customer satisfaction, location, of facilities, advertising, a substantial cost to the company. >> mr. henderson and? >> in my testimony i talked about the cost of the company over time has incurred to provide support for a dealer body total which is financially weekend -- weekend. there is that cost in the testimony.

second, general motors market share is a 10 full market share points higher than it is on average it is a source of strength even when done with restructuring will also have the most extensive dealer body in rural america up. what cost us is insufficient distribution in metropolitan markets where we have many locations and a few strong one's. that is a significant problem today. >> it has been estimated the average for foreign transplant dealer is twice that of a comparable domestic dealer. is this true? yes or no? >> i don't know exactly double blood is a substantially higher, perhaps. >> toyota reverses a chevrolet approximately would be double. >> if this is true, but apparently it is, why is that

the case? mr. press first. >> the reason and toyota's case they sell 2 million cars at a 1200 doo there's and if we did not have the restructuring we would sell about 700,000 retail out of 30100 dealers. average sales per dealer is substantially different. as and toyota case the product line is less truck oriented and more mature market or sunshine states in a bus presents in the rural areas are secondary markets and also don't have the 80 year legacy of having a substantially higher dealer body to see the volume disappear. >> mr. henderson? >> i don't have anything to add. >> gentlemen do believe your respective numbers of dealerships has been reduced

for your restructuring plans and sfo has parity been achieved through these plants and a way which will be adequate with regard to our foreign transplant competitors? >> we tried to achieve a dealer network going forward to have a minimal impact on removing dealers there have been critics that say we did not go far enough, we did not want to go all the way to have parity but we are in a good position to go forward and have the dealer network emerge over time. but through the bankruptcy and emergence of a new company we have the optimum amount of dealers going forward 2391. >> and our case also as i mentioned we would expect 3600 dealers approximately even with a

modest improvement next year and conservative assumptions we would almost double. >> very quickly, it is said the dealer should be permitted to remain open while you terminate to provide service and maintenance. what is wrong with that arrangement? >> and our situation with there are surrounding dealers that may take the franchise for example, the dodge and jeep dealer may take a chrysler franchise. they are spending money and adding overhead that is part of customers that would travel with it. >> you are saying this is having an adverse affect? recon adverse impact on adjacent dealers. and there are some cases there are a single point* that may have a