>> have either of you ever spoken to brian dees? >> i have. >> heavy exchange e-mail's with this individual? >> i think so, yes. >> i have never addressed one to him. i may have seen some. >> i would be particularly interested in those e-mail's to be made part dick made available to the committee and a part of the record. here is the deal. taxpayer funds, paid by the employees of these dealerships have gone to the closings of these dealerships. i sit on the joint economic committee. we saw unemployment numbers for last month in excess of 9% heading for 10%.

what is that number going to look like after you decimate these dealers across the country? country? that is a rhetorical question but mr. kollek i did not intend to ask this but your story is so similar to a story i have heard done in my district a gentlemen be required, if browbeat into buying a dealership now he has to close the original dealership or the one that he purchased are you aware of other areas in the country where that occurred? >> your note that there is always some sort of animosity between the factory and the dealer. i don't know it does not need to be. ford, there's no animosity between the factory and the dealerships. i think they will come out okay. >> are you getting remuneration from the manufacturer to dispose of

your inventory. >> would love to tell you about that. mr. press may sit sound like sunshine and lollipops. you're exact word was invoice we're selling them mop at invoice negative o back ashley ppa minuses of 350 we are selling cars 1500 below invoice on average. we normally sell to the public as and voice or right around there. we are selling them up 1500 less than we normally do to the other dealers. >> parts inventory? >> mine has not been addressed yet. i don't know. i am still in a state of shock. >> i was told when chrysler came to see me yesterday i was told they took care of all of their dealers they are closing and inventories and cars and parts inventory of would be purchased. >> what needs to be understood, there is no

written procedure how we will be paid. thank god i only have two new cars left but some have half a million dollars worth. we hear the cars will be trucked away and we will wait for the money some hopper i have not seen anything on paper obery will be paid. that is an important aspect. is there a written procedure? >> first of all. >> dell webb has been megabyte to respond to the issue of three imperfect -- reimbursement. dealers are being reimbursed what they paid for the vehicle, what it cost them less $350. though word invoice comment it includes the hold back that we collect and give back to them but they are being paid what they paid us less $350. >> that is just 2009. >> in terms of the process we

have published the process for the redistribution, we have asked the dealers to sig an agreement that allowed us to take responsibility and what the process is and it is available for them to understand what can be used. >> mr. spencer i know you are jumping in but go ahead. >> speak into the microphone. >> you asked the question of other dealers in a similar situations of the stores that were terminated, three of them were project genesis stores, one of them under way, we purchased a piece of land at chrysler's insistence, 1.$6 million in the market and that store was in the area they wanted to get away from. and quote we're undergoing

construction and, if they agreed to hold off construction because of the market conditions for one more year than they cancel the franchise. we still own the church and their penalizing us for results in an area they want us to get out of. >> time is up. this cries out for further investigation i hope this committee will do a very thorough job as to what is going on in. in texas it looks like we have cleared the decks but of who we are clearing them for progressivity is about to make a lot of money on the re-emergence of chrysler. by to know who that is and what is in the works by have a nagging suspicion there is a political calculation and it is extremely distasteful would you like these gentlemen who have had unconstitutional takings of their private property. i yield back. >> mr. press, i blind to ask you if chrysler has a similar

set of written criteria as gm for its closures? >> i am not familiar with this document. >> let me ask you does gm have a written i am sorry, does chrysler have a written set of procedures foreclosures? yes or no? >> yes. >> does this committee have that? >> it was published. >> does this committee have it? >> i cannot answer that. >> mr. dingell suggest you submit that for the record and we would appreciate that. a secondly, i heard both gentlemen, mr. henderson and mr. presser testimony about what could make a dealer profitable, using cars or parts or service saying or other things. i will start with mr. henderson, if a dealer is

profitable, and buying cars from the manufacturer what it is selling, what does it matter if the profit center is derived from new cars or sales center or parts? >> good question the. >> thank you. >> in the case of the dealers who were impacted in the wind down situation 60% were not profitable. >> my question is if a dealership is profitable then it why should you care what center? very quickly. >> we look at overall profitability not individual centers. >> right. but if a dealer is profitable from whatever source and buying cars from gm, why would you care? if it is profitable then why not let it stay in business? >> we don't care if it is from parts. >> so why would you close a dealership like that? >> not all cases were

profitable. >> customer satisfaction. >> now it is customer satisfaction? >> multiple criteria. >> mr. press? >> first of all, we have two many dealers. >> why would you care if they're profitable and buying cars from chrysler? regular way to survive is to have all three franchises under one roof. that is the way in the dealer will survive to have tried branding first of all. >> what criteria is to have all three brands under one roof? spirit that is the position we will achieve. >> that is not the only one. >> in colorado chrysler has terminated five of the seven top performing dealers including chrysler store in castle rock which is not in my district. they sell all three brands under one roof.

so and they are profitable so what would you say to them? you probably don't know. >> it is difficult to go through each individual dealers. >> but what would the criteria before a store like that? >> i am not sure you say they're the top performing store i do not know what that means. >> chrysler dealerships five of the seven top performing dealers in colorado. this dealership in castle rock is profitable and has all three brands under one roof. so for people like them, not them in particular, what is the next criteria? >> if it is not top performing it is costing sales. >> it needs to be top performing and have all three and what else? >> minimum sales responsibility so we're not losing money and revenue.

. . but i heard you say that unlike gm, chrysler doesn't have an appeal process, so my basic question to you is the to these dealers no, people like medved

by the dealership was terminated, have they been given the information? >> because the present of bankruptcy and this coincided with lawsuit we were not in position to communicate and i want to clarify because that was asked before now that we have come out of bankruptcy we are on the position and will communicate to the dealers and let them go with the factors are and we had a very robust process fair and equitable and tested and approved by the bankruptcy judge by the appeals court of new york, the supreme court of the united states but we would be more than happy to allow committee members to see the same information, and it's difficult but we can go through in the individual dealers as you wish. >> but will use it is you did not help the steelers before why they were terminated so you can understand why they are upset. >> a understand there and upset and i can understand in mind soul the whole situation of

bankrupt isn't a spectator sport. >> i used to be a lawyer in a different life. i don't know of any provision in the bankruptcy rules that says you can't tell people. maybe that was the bankruptcy judge that told you not to tell people but it seems to me you need to give people information. >> there was lawsuit filed on behalf of the bankruptcy of the dealers and did information other than discovery to go forward. now that we are out of bankruptcy -- >> what is your time frame for that, sir? >> we are prepared at any point to become transparent with the dealers the would like to. >> sing you can get that out and bought, the next week you think? >> perhaps sooner -- >> thank you mr. chairman. >> mr. leal for questions. >> thank you, mr. chairman. and i am a co-sponsor of h.r. 2743. it took me about two seconds to sign that one. >> is your mic on?

>> i guess i've got to lean closer. so you're saying that you have a very objective methodology to determine what dealers survive and will dealers didn't? i mean, you could feed the dealer data into a computer and then you had this very objective criteria than a computer would spit out without any -- was it that kind of deal he or was there any subject of part to this? >> we have over 200 people in the field from local markets that were part of the process of collecting the appropriate information. we have a data service the provides demographic location information and the identification of future trends. we have the process of understanding what franchisees we have, the criteria from the dealers own score cards. it's a number of pieces of information. it wasn't just a computer. it was vetted through a number

of levels. >> -- why would a dealer who had maybe one of your to prance and was a performing dealer and profitable dealer, why wouldn't they be given the opportunity to just pick up, the you stores selling the third brand to them? what stops you from doing that? >> there's a couple reasons. one of them of course is you don't want to dealers that maybe next door to each other selling the same products. i don't think the dealers want that either. in fact there are laws that require 10-mile separation. we have to be careful to craft a right network going forward that has the distance and appropriate market so the dealers can survive. and normally many of these locations where we hav many locations are in close proximity and they have to be brought into one. one dealer may be chosen and one may not.

>> you sold it to of the three brands, right? the minimum sales steel, have you met that? >> yes, and there are two main criteria that have been used to terminate a dealership. minimum sales responsibility and minimum working capital requirements. we have always been at 150% of both of those. what other criteria is taking care of the customer, customer satisfaction. we have always been just about the highest in the state. >> there is a website where you can go on and look up dealerships and they do ratings. five out of 5 customer satisfaction with a 24 month rating. get. i have another dealer here i

won't name them out of respect for the same market area that was kept up their dealers rating is one on a scale of one through five. this is a surviving dealer. mr. golick is a dealer i would like to submit these ratings for the record. >> without objection. >> i want you to grab that a book on the table and turned to tab 14 on that book. now, if you are looking at tab 14, this is an article that appeared in automotive news on february 5th, 2009. and it describes a conference call which mr. press, president of chrysler, urged dealers to buy 15,000 cars from the company in order to save it. now let me read what mr. press reportedly said to the dealers. quote, you have two choices: you can either helpless or per noss down. mr. golick, are you familiar with this? >> very familiar.

>> the article also quotes mr. press saying and i quote, if you decide not to do that, we've got a good memory of who helped us and who didn't. do you recall that, mr. golick? >> i very much do. >> how did you feel about that? did you take that as a threat? >> i never heard that from an auto executive in my life. i've never heard anything like that. >> mr. golick, as the result did you buy additional cars? >> you know what, i honestly can't remember. i think if i had to look it up and probably did not on that particular month but i did all the other months. i think chrysler could provide you with that, but i have a feeling i did not that particular month he made that comment as i sloughed off and told my family i can't believe this guy said this. >> mr. keikenapp, were you on that call? >> yes, i was. >> are these quotes attributed to mr. press in the article, do

you recall hearing that? >> yes i did. >> did you buy cars as a result? >> i did not. >> how about you, mr. spitzer? >> in some cases we bought them and some of the stores couldn't take them. >> after you and other dealers put up your own money to buy these cars in order to help out the company, you were shut down a few months later. now, let me ask you, mr. press, is this an accurate quote in the paper or do you deny saying this? >> it's accurate. >> it's accurate? so you get on the phone and ask your dealers to help you survive, you ask them to buy more cars and basically said you've got a good memory and you will remember the guys that helped you out and the guys that didn't. can you tell this committee that you didn't use that as one of your criteria to decide what dealers got -- if dealers said we take that as a threat and present and we are not going to buy additional cars would that be used to retaliate against the

dealers? >> absolutely not tall in any way, shape, or form. >> how do you take a statement like we have a good memory who helps us and who doesn't -- if i made that call to you and asking that, how would you take that call? >> may i put that in context? a understanding your question and i realize the way that could be used in a manner that may not be accurate. but the situation was we had a shutdown in december before christmas. we made no production. we had asked for and received a very small part of our t.a.r.p. fonts'. we asked for t.a.r.p. funds for a first quarter. we got one month and had to extend through february 14 or timing to submit to get additional t.a.r.p. funds. in the month of february, we had insufficient production to meet cash flow targets that would have cost the company to liquidate. we had continued and were committed for everyone's sake to

avoid bankruptcy and not liquidate the company. and we did make an appeal to the dealers to please understand we need to buy the february production. i realize that you were not out of cars, but if the company is going to make it through february and we have a chance at getting the t.a.r.p. funding, which we finally did and we are still here today, we would need the help. 70% of the dealers purchased cars, 30% hadn't and mike quote was something like if you don't buy the cars today, we liquidate, we are gone. if we buy the cars and stay in business at least we have a shot at getting to the end of this and getting money. it's like a bucket brigade and everybody's got a bucket. 70 of you -- >> destin present is fine. >> those of us in the brigade will know which ones are in and which ones aren't, using the peer pressure of all loveless recognizing who is there. absolutely i am a dealer body amount would never threaten a dealer. you can ask anybody in the

united states i would never use that pressure, and i promise you under any oath that there was never an aspect, and if you ask the people that did not get approved to go forward, they both equally either bought cars or didn't and that is why we were so insistent on the redistribution program to make sure any dealer that cars would be reimbursed. we added incentives. we had the best sales in february after that, we had a retail month for the first time in history we outsold ford. we sold those cars we didn't want the dealers to score them. we wanted to save the company and get to the point we could emerge from the currency. >> three months after you cut those guys loose. i see my time is up. >> ms. sutphen of ohio. >> thank you, mr. chairman. there are so many things i would like to pursue but i would like to start, mr. henderson, you said gm has an appeal process referred about that and i just want to ask why do you have an

appeal process? >> at process was initially certainly intended to be dated driven up the data isn't always right which is why i think we felt certainly compelled to have the review process which would reconsider facts that may not have been clear in the data and that process is born out with the right thing to do because there were cases we were wrong. >> would you say it was a matter of fairness? >> yes. we thought it was the fair thing to do. >> and in those decisions where your decisions were overturned on the appeals, can you tell us, you know, the examples -- we heard the one about the devastation of the bridge that stopped the business from going forward. can you tell other examples of what was overturned? >> recently i don't have the full knowledge of the 45 but another recent example is we ha a small town that had it she

buick gm store and the conclusion initial plan would be to consolidate the two and a conclusion after the reconsideration was no, let's leave that to for example the would be another one. >> mr. press, in light of what we have heard mr. henderson say about the need to have an appeal process because fairness requires it, equity requires it, how do you feel about that in light of the fact chrysler has no such thing for those who have been shut out? >> interesting question, i understand contrast. the fact is the situations are different. >> but the employees are affected the same way and the dealerships are affected the same way. >> they are both dealerships and auto companies but the factors that led to the appeal process don't exist for chrysler and that's a completely different situation because we don't have a term agreement that comes up that has -- >> with all due respect the fact that was a determining factor whether or not they were going to have a peace process was

fairness and that a applies to chrysler as well as edna? >> we have a situation where the company went bankrupt -- >> i understand. >> a new company was formed to go forward and selected specific dealers based on criteria beyond the dealer performance from the standpoint of a strategic network, the number of dealers, locations, number of brands -- >> i understand the criteria, but again, i think we are leaving out the point and the point is both companies have an obligation i would suggest to make sure those who have given a lot in working with your company for many years, decades upon decades in some cases, an appeals process as a matter of fairness. i understand all the underlying issues and i understand the

business perspectives but what mr. henderson just referred to is something that applies to both companies and that is a matter of fairness and i will move on the line a little bit perplexed because i would suggest, mr. press, regardless of your criteria if it were okay at the inception and it was all perfectly subscribe to in terms of the inappropriate, you might still make mistakes. so with that we will move on. i want to clarify a little bit more this whole idea because we hear from the dealers about how the dealerships don't feel they cost the companies a lot of money so if i could get from mr. press and henderson a yes or no answer to these questions is a true the dealers pay for the cars before they receive them? >> yes. >> yes. >> and is it true that dealers

pay to have the cars shipped to them? >> yes. >> and to the dealers pay for the parts as they receive them? >> yes, ma'am. >> and to the p dealers pay for their science? >> yes. >> and do they pay for their buildings including taxes? >> yes, ma'am. >> do they pay obviously their employees and related taxes? >> yes, ma'am. >> do they pay for the brochures they hand out in the show rooms? >> yes. >> okay. so mr. press last week you testified the dealer's cost you in the neighborhood of $3 billion. have you provided substantiation of that number somewhere? >> yes, in the testimony. >> that is what you are submitting as the substantiation? >> we have submitted written testimony. >> yes, i have your testimony. there's nothing supplemental to provide for any additional substantiation, just your

testimony? >> yes. >> okay. mr. press, told all the states allow you to terminate dealer agreements provided there is just cause? >> it depends on the state. there are different franchise laws that exist. >> i understand but do they all provide you with the opportunity to terminate for just cause? >> i can't answer the question. >> fair enough. how many dealerships did chrysler germany last year because of the substandard performance? >> i can't answer, there were some but i don't know how many. >> would you please provide that? now we have 789 being terminated, and it is a huge number. >> it's not the same reason. >> it would be interesting to see how many were terminated under the just cause standard in the last year.

mr. press did i read correctly use of the cost 21,000 to half staff call on dealers or was it some other number? >> it was now just staff, providing training to have the computer systems, to have the internet program up, to have all the records inside the the dealership, the company, all of the audit information, the computer data, the field organization largest a traveler but a full field of this transportation, logistics, part service. it is a fairly large enterprise of administrative costs and its $41,000 per dealer. >> ok well -- i will wait for the next round. >> [inaudible] >> thank you free much, mr. chairman. you've been hearing very clearly from republicans and democrats who represent dealers that there

is enormous concern about how they have been treated and the impact on communities. one area there seems to be dispute is whether this was a decision each of these decisions unclosing a dealer was made by chrysler and gm or was orchestrated by the white house? and i know you were asked about that in the senate hearings and it's important it be clear who bears the responsibility here and accept the responsibility. so mr. henderson, let me ask you, is it in fact the case the treasury was not involved in any way in this election are the ifill met in the guidance on the number of dealers the would be closed? >> could you repeat the question, i'm sorry. >> basically the question is who made the decision on how many dealers to close at which dealers to close?