opportunity to take a look at very minimal number of companion points, but in this particular case, it was substantially reduce the ability of the dealers to go forward to derive the full benefit of their business. . .

right of into this moment in history. and mr. mazzoleni and michael and a brother-in-law who were chevy dealers advertised your product on big ten sports networks so that your products are sold in this area which you have this dominant brand loyalty. yet, i look at page four, mr. henderson, of your proposal and what do i see? wind down dealers by state, pennsylvania, 90, ohio, 79, ellen malae, 66, wisconsin, 50, michigan, 58, indiana, 48, iowa, 46. and after your description of why these foreign auto makers are not playing in this part of the country i find it very difficult to believe that you will perpetuate your brand loyalty in light of these deals

are pleasures in my state and representative stupak and congressman dingell and congressman sutton. i see the evaporation because of this practice and i wonder whether it is part of your you have given consideration to that. mr. henderson? >> first of all, i'm able for the unborn in the state of michigan. second of all, when we are done general motors will still have what we believe will be the largest distribution system for the small towns in the u.s.. approximately 1500 of the 3600 will be located, sir. >> actually, through the new dealer network with increased the share of dealers in the rural markets and reduced the share of dealers in the metro markets. we do realize the importance. the difficulty is from the volume guinn from 2 million to

50,000 we don't produce enough vehicles for every business to stay in business. it's unfortunate but it's a fact and we are trying to make sure the dealers have highly enough volume they can stay in business and have a good operation going forward to compete with the transplants. >> into the two of you that have accomplished so much in your career the people sitting on this side of the table have a much deeper sense for the attitude of our constituents, and i would be shocked to see your brand loyalty maintained in light of these shutdowns. one of the things we know, mr. walden referenced this in his opening statement, both companies have been doing advertising to talk about their business strategy going forward and mr. henderson, we have seen the gm ads that talked about how your company is going to stand behind the products it sells going forward but in reality you are not standing behind your product speak cause one of the

things we know is part of these bankruptcy proceedings every existing and future product liability claim that your company could be responsible for for selling a defective product is going to be distinguished, isn't that true? >> and our case, warranty recall will be assumed by the new company by product liability purchasers and normal 360 process do not assume the obligation. >> so they will be extinguished in the bankruptcy. >> they will be claimants of general motors. >> because we know what happens to those unsecured claimants. >> likely. >> you are going to be passing on monte league, as if cost shipping because of that. >> know we are not peery islamic yes you are because i can tell you in the state of iowa and he is immune from liability as a distributor of your product if the manufacturer is in existence and not in bankruptcy. that's the fact in almost every

state understand product liability law. so if you disappear as a potential claimant in that process, every one of these dealers is going to be on the hook. not just your remaining dealer network the existing dealers that no longer have a franchise. >> both the wind on agreements as well as continuation agreements will be assumed by the new general motors and indemnification agreements gm has today will continue. >> the indemnification procedures -- so you are going to assume responsibility and passed it reliably on? >> as part of our obligation we will indemnify the agree years who sign on with general motors. >> so they are going to have to rely on you to step up after they've been sued and they pass that on to you and then they are going to have to have counsel involved because of that status. >> the serve, i think that by virtue of the indemnification continuing to the new company we

do that purposely to try to avoid a situation where a dealer could be badly hurt. >> now mr. mceleney, i want to give you the last opportunity to talk about the impact on every one of the dealers that you represent as the chairman of n.a.d.a. who haven't had a seat at a table or an opportunity to tell their story because i am guessing that you been getting a lot of phone calls. what has it been like for you and what type of concerns are you hearing? >> well, we are hearing many concerns expressed earlier today by some of the dealers on the panel. they run the gamut of the dealers sometimes third, fourth generation. my family as you know has been in business 95 years and going forward but there's a lot of dealers like me that are not. most dealers the net worth of their enterprise is represented in the value of the real-estate of the fact of when it and the value of their franchise and in the case of dealers being

terminated by gm or chrysler the franchise value is a zero and immediately realize the value is single purpose real-estate particularly in this commercial real estate market that is pretty stressed any way would be severely devalued even to the point many cases dealers will owe more money on the property that is worth or they are obligated to for a number of years and have no way to generate revenue to pay for that. so those are some of the issues the dealers have made significant and tell me the expectation they would have a franchise going forward as long as they met the requirements of the franchise agreement are being left with those obligations. so there is a variant of stories that are tough personal bankruptcies in many cases and there are employees are having to take personal responsibilities. they are on average about twice what is paid in the retail so

these are good jobs. most of these people will not be able to go to other dealerships and find employment. particularly in this market. i don't know of any the worse hiring people. i suspect there may be some as this rationalization takes place in the dealership market areas but for the most part the some hundred 20, 130,000 employees with terminated dealerships will have to find work outside the auto sector and it is a tough market as you know to find employment right now, so there is pretty devastating stories out there. >> thank you, mr. berlin. ms. sutton. >> thank you, mr. chairman. press about the appeal process and i talked up the state law and under the state laws about the country it is my & and that you can terminate for just cause you can terminate dealerships. is that your understanding, mr. henderson?

mr. press wasn't certain. >> i have the same recollection. there are provisions but they depend bistate but yes in general for cost. >> when you say they depend or maybe differences but they all have some sort of just cause standard; is that correct? >> i can't answer the question. >> i can tell you in ohio there is a law that allows termination based on just cause so we can go with that understanding. let me ask you how many dealerships did gm closed last year based on a just cause under the state laws? >> i will have to get back to you i don't have an answer. >> do you have any idea? >> no >> and how many are easily did to close during the bankruptcy? >> as we talked about, we will move from approximately 6,000 to approximately 3600 overtime. >> okay. 2600, is that right? 3600. >> 2400.

>> okay i had 26. thank you. i want to follow-up -- >> the reason by the way the number isn't perfect. it can go anywhere from 3400 to 3800. >> okay, good enough. i want to follow on some of the discussions going on awhile back about information being transferred from the dealerships that are being closed and the discussion you said gm has a record of securing and it was mentioned it was going to go to third parties so who are those third parties? are they identifiable at this point? >> we can identify them for you. these would be party is we would use to sell vehicles to customers to make sure the surface is taken care of to provide surveys. there are many reasons we want to contact customers.

>> i would appreciate you submitting hall of the third parties, but they might receive that information to the committee. mr. spencer i want to thank a again for coming today and i want to just ask you able to more. in a poke earlier about the investment that you have put in to this work of course representing chrysler and other products, how much have you invested in project justice so far? >> working closely with the people from the management of the business which includes michigan, illinois and so forth, that they have responsibility for most of our dealers six upset one working very much in concert with them and sometimes almost at their direction i won't say insistence but let's say strongly urging we have consolidated to genesis stores. one of them is in florida with a

different business center it was the first one in the state i think or very close. 45 -- it was called project alpha at that time. we have spent in concert with again, chrysler corporation i think about $6 million in acquisitions at their urging insistence in fact in two or three cases i was called by chrysler and said this is and here is what you do call him by and that way we will consolidate. that is just in good will blue sky that has gone away. over and above that have invested the project genesis and. they changed the name somewhere along the way, and they didn't change anything but the name i don't think. i think in bricks and mortar just about $10 million. that doesn't count the land, that is just buildings done in concert with chrysler to

consolidate and accomplish project genesis. with all due respect to mr. press why have healthy respect for over the years going back to his days eckert we've known mr. press for probably 30 years, and the arbitrary way which the steelers were selected has no connection to project genesis or all three brands or stand alone from our own experience i can assure you and it also anecdotal observations from other dealers and i know that we are stand alone spent for work on the genesis got canceled, and all the petitions and accommodations that are out there. >> have you received the written criteria explaining why you're dealerships have been cancelled? >> we've received nothing. we didn't even receive termination. it was on the web. i was told by other people. we didn't even get notification and was going forward directly.

mr. keikenapp that chance if you could ask a question here today, what would that question be? and [laughter] if you don't recall -- >> i think what is frustrating is that we are a very good dealership and we have done a good job and there's other dealerships that surround us and that have lost financing but don't have the ability to buy cars. we all all of our cars all right. we didn't have a financing problem. and now there's dealerships within gm and chrysler that don't have the ability to finance their vehicle so. they are now having to get bailed out by the small business administration and it's

frustrating. i think there's probably some things i might have said that created frustration with the factory and i think it cost us these jobs. but i think that we have done a great job and i know that within tacoma we are applying for that point, and i just hope they take a look at us because i feel we are the dealer and if we were to have conversations with them in regards to mabey moving the point to someone else we will do what ever it takes. i believe in the product. i believe in what they are doing is right. i don't believe in eliminating the dealer body did any good.

i believe the bankruptcy was something that was inevitable but products they make are far superior. the dodge charger, the challenger, the 1500 are phenomenal. and i believe in the product. and it's just unfortunate when we have such a well-run business and there's other dealers out there that are substandard you can't really look at any metrics from any dealership and shoot holes and everyone of them, and i don't believe it was -- copps pumas i appreciate your testimony. thank you khan --

>> general motors even mr. press, i guess i'm concerned as i see the opening areas about the rural areas where i live have any of you talked about 100,000, 80,000, i don't have a county in my district that house 70,000. i am a vast rural leary and i think we have got six chrysler dealerships being closed, maybe four or five, maybe more than that in my district of general motors. heil or people going to get service? if i bought a car this year at general motors or chrysler and my dealer is closed how do i get surface on my car? am i going to have to drive two hours somewhere else when might service light comes on? i mean, how do you do it and especially when you talk about the loyalty and of rural areas you've got him% greater loyalty base but we are getting hard

hit. >> mr. chairman i appreciate the concern especially with the customers and that is a very fair question, customer size is important. after the case of the reorganization we actually increased the share of the dealer body in the rural markets. a higher portion of metro market dealers were actually removed. >> i guess i am saying if you improve the world market by which to close my district? you can't get much more rural than me. and we lost six of them. >> the largest impact was on natural markets where the dealers were too close to each other -- >> we don't have natural markets. very few people in between. >> i'm very familiar with your area. i go there on weekends often so i appreciate that. actually in terms of customer convenience from the old dealer group to the new dealer group the customer dealer increased

9.4 miles, so we were careful to make sure that we were able to retain the convenience to customers. there may be -- >> that's going to be nationwide. >> there may be -- >> .9, like one for world markets? >> there will be a few rural markets that will no longer be represented. >> the only way to do that is to take these dealerships you shutdown and of other dealers into their places. >> there's other dealers that have access to these markets or or adjacent especially in the case where there is a dodge dealership that goes out may not increase or it would be very minimal in terms of the number of locations and second, from the standpoint of those markets if there is a market there may be some markets we are abandoning the market if there

is no longer potential for long-term growth and we don't have the 700,000 units of production we just don't have enough vehicles. >> but i trusted you guys. i bought a car this year when the push was on and you abandon those markets. he abandoned me and if i remember the federal government said we're going to guarantee these warranties for five years, so the federal government, i am going to guarantee these warranties five years when you abandon part of my area? i might need that f-15. >> i am not aware of any f-15 trips to the code needed for service, but we will sure take a look at your area and see what the distance would be because a jeep dealership that closed the repairs can now be made in the dodge chrysler dealership that exists within the same market areas of the customers will have another service outlet available >> we tried as much as possible

we looked at state-by-state, we looked at averages across the united states if we look for example the upper peninsula average of michigan, 19 to 23 minutes and oregon, chevrolet will go from this is miles comics to come ten to 14.5 models -- the issue is on the extremes because there will be situations we clearly have a problem. >> mr. chairman, if i might, closing the dealership is probably at least 100 miles to mad first, that is the nearest chevy so the people are going to go from climate falls now to medford. burdens, closing burns, 136 miles to pay the new list dealership, right? >> we will have situations where we have problems and we are going to have to solve these

problems. >> and how will use of the problems? putting a dealership back? >> that is not aware intent and one of the things we said in the case of -- first fall, another general motors franchisees can provide work. >> there isn't another one in climate falls, burns -- >> the second thing we cities in the event we need to put in place, put a location back one of the things we committed to the senate and i welcome it is if we need to locate a spot we will provide system operators the opportunity to look up at first. >> what's go to bend, oregon. you close to bend, redmon and leave matchless. so, what is that process is going to be put in place that allows mr. thomas may be to get his dealership back. you're telling me you were going to look at it and decide. i wouldn't be asking if it wasn't taxpayer dollars funding this whole thing, i would like you figured out under the law of the land.

i actually voted for t.a.r.p.. i didn't vote for the although bill but i voted for t.a.r.p.. what we will do as i said we will have location bilocation if we've made mistakes in the future we conclude we can't take care of customers in the location and appointees to be put back we would go to whether the individual was affected and give the first chance to do that >> we may follow that further because i am just looking at chrysler and here is michigan you know the peninsula is very small. two big cities, dealers are gone. that's the two biggest cities in the upper peninsula and now the next one closest across the bridge is sheboygan, and the next one is rogers city, that's gone, and actually with the cadillac dealer there's no one in northern michigan.

basically north of lansing or traverse city, which is part of my district there is not a cadillac dealer around there with some of these ideas. not that i drive a cadillacs, ayman oldsmobile bayh and could took that away, too. white is the distance as we have to travel. i will have to follow that up because looking at the map and thinks that have been closed just doesn't make sense and there's district and miles between so they could say it could hurt you in rural areas where there's still loyal customer base i agree plus federal government's guarantee warranties. >> i just want to add one thing, mr. chairman, because of the concerns we've raised today, about one of the other critical aspects of these bankruptcies, that is the responsibility when forward for any products that may be defective and the

implications for u.s. taxpayers and the dealers in this room i would strongly urge the committee to take up that issue as well and flush about in more detail. i think it has enormous economic consequences even for people lost their franchise and i would like to explore that in further detail. >> i continue to hear from dealers and also to reiterate i know dr. burgess had to leave, but i know he entered into that discussion with both you and mr. prez and mr. henderson about e-mail traffic to i think it's in the white house that might i understood you to indicate you would supply that e-mail dak george's approach would be to follow up in the letter of request but eissenstat isn't a problem for you to provide those e-mails. ms. sutton? >> thank you come mr. chairman. i want to add of course as you can see who stayed here at the end as was pointed out the car

act we passed this week represent braley, and our original cosponsor and chairman stupak and chairman dingell were involved in the process of getting that bill done and it is intended to have a concrete impact because we do believe that mr. keikenapp said, we want for chrysler and gm to be a success because it is linked to our work communities and jobs and the food it puts on the tables of the people we are honored to represent and so it's painful for us to be here and in this position but the payment that we feel listening to this is nothing compared to what we have heard displayed here on the folks losing their dealerships and i want to thank all of you that came here today to put a human face and perspective about

cost of what is going on on this major problem so thank you for coming and mr. chairman, thank you for holding this hearing. we do want you to be successful. >> thanks, and that concludes all the questions from the members. i keep the hearings have been helpful since the senate hearing we have a process with general motors to help some of the steelers and there is gm and the auto dealers association working together to try to do some things i think that's positive and we have further explanations but we will continue to monitor this. there's the age 2743 sitting out there, g mack and others and it's been a long hearing and we appreciate everyone for coming and there is something anyone wants to out i will give you a minute if you want to add something. we really do appreciate especially the dealers and mr. henderson and mr. press and others coming some distance. i know that you've raised your hand and that because the rules of the ray hearing i couldn't

recognize you so if there's something you want to add we will go right on the line and if anybody wants to add something that we will wrap this up. we are going to keep it somewhat brief. >> im just perplexed when mr. press last week said in the case of dealers not being taken forward last year they lost 55,000 units of sales, i -- the number is important to them apparently. but then like i say, they are going to lose 140,000 units in sales when the steelers are removed. i know that he says they can only produce 700,000 cars but there has to be a plan in place for growth the market improves. i'm sure it can build another 140,000 cars. that's why i am perplexed on that so i thought i would throw that in. >> thank you for coming. mr. spitzer, anything?

>> [inaudible] [inaudible] >> mr. press? >> i appreciate the opportunity to communicate with the kennedy and provide this information. it's been a good learning experience. this will be good communication going forward. i don't know if i am looking forward to the performance review when i come back but i guess this would be the form to do that. ..