Merkley: Chrysler to Buy Back Cars From Dealers Forced to Close

Tuesday, June 16, 2009

Washington, DC – Oregon’s Senator Jeff Merkley announced today that Chrysler has revised its strategy for compensating dealers that are losing their franchises.  Last week, Merkley sent a letter to Chrysler and GM taking issue with the lack of assistance. 

In the letter to Fritz Henderson, CEO of General Motors, and James Press, President of Chrysler, Merkley expressed his belief that the market should determine whether or not a dealership closes.  Merkley requested that, if these two companies insist on terminating contracts, the dealerships be compensated to minimize harm to businesses and communities.

“In Oregon, many dealerships have been in operation for almost a century and most are family owned.  These small businesses have employed local Oregonians, donated to community little league teams and organizations, and sold and serviced the vehicles of their neighbors,” wrote Merkley.  “For these small businesses, the orders to close their dealerships mean the loss of their life’s investments.  These dealers now have little choice and face a difficult and uncertain future.”

The lack of compensation is a particularly acute problem for Chrysler dealerships that received only three weeks notice to sell off existing inventory before the contracts are terminated. 

Chrysler has now informed Senator Merkley that they have committed to buying back 100 percent of auto inventory at cost from dealers being forced to close.  While GM is providing an 18-month time-frame for shuttering dealerships, it is only offering some conditional rental assistance and no offers to buy back inventory.

 “While I would prefer to let market forces determine which dealerships close and which stay open, Chrysler’s decision to buy back inventory is an improvement for dealers who are being forced to shut their doors,” Merkley said.  “It isn’t a perfect solution, but hopefully this agreement will help ease the burden placed on dealers and communities affected by closings.  GM would do well to follow Chrysler’s example and provide additional compensation for dealers losing their franchises.”

In his letter, Merkley noted that GM and Chrysler were given billions in taxpayer money – not only to allow those companies to continue to operate, but to help related industries and workers withstand these difficult economic times. 

An electronic copy of Senator Merkley’s letter to Henderson and Press is available here.

An electronic copy of Chrysler’s plan to compensate auto dealers is available here.