At the third part of hearings at the Judiciary Committee, Subcommittee on Commercial and Administrative Law, Rep Maffei offered the following remarks.
"Thank you, Mr. Chairman for holding continued hearings on the ramifications of the auto industry bankruptcies. Automobile dealers are one of the largest private sector employers in the United States, providing tens of thousands of local jobs and contributing millions of dollars in tax revenues to states. They are anchors in communities throughout the country and many times ownership is passed down from generation to generation. In addition, many auto dealerships are minority owned and have traditionally provided strong local community support.
"As I pointed out in yesterday’s hearing, there has been a lack of transparency in the means by which Chrysler and GM have chosen to reject dealers’ franchise agreements, and I still believe there is a lot of confusion out there as to how the closing of hundreds of dealerships will be financially beneficial to these two auto companies. Over time, automakers created the franchise dealer network specifically to lower their costs, as they outsource virtually all costs associated with selling and servicing cars.
"There are some arguments that in the long run you need to have a smaller dealer network to help make sure the prices are stabilized and there are some expenses that auto companies have to service these dealerships but, in the short run, we can't find anything. In my district, we have already lost 11 dealers in the last couple of years because of market forces, so it seems like the market is working in some cases.
"This is precisely what led me, along with my good friend from Maryland Frank Kratovil, to introduce H.R. 2743, the “Automobile Dealer Economic Rights Restoration Act of 2009”, which would require Chrysler and GM to continue to honor their commitments to auto dealers. Specifically, the legislation requires that auto manufacturers in which the Federal Government has an ownership interest continue to honor their commitment and not deprive economic rights to the dealers, essentially protecting small business owners, workers, communities, and jobs.
"This bill has widespread bipartisan support, as there are currently over 250 House cosponsors. We have Members signing on who are on the left of the left, the right of the right, and everything in between. From all over the country from rural areas to urban areas, this affects all local communities. These are family businesses that are really part of the fabric of our communities. I look forward to the testimony of our witnesses."
