Bill aims to help Colorado auto dealers targeted by Detroit
DENVER – Elizabeth Daniels told lawmakers here Tuesday that she doesn’t want General Motors to ruin other car sellers the way the auto giant has tried to destroy her family’s 80-year-old dealership in Colorado Springs.
Her company, Daniels Chevrolet, is fighting through arbitration to keep selling GM vehicles. The bankrupt automaker told Daniels it wants to end its four-generation affiliation with the dealership in an effort to downsize its nationwide network of Chevy dealers.
“It doesn’t make any sense, and it was wrong,” Daniels told the House Business Affairs and Labor Committee.
Daniels and other car dealers spoke in favor of a measure penned by Calhan Republican Rep. Marsha Looper that’s designed to help car dealers that lose franchises. The bill would force car companies to give more compensation to the dealers they close and give those dealers a right to reclaim their businesses if the carmaker decides to return to the market where they’ve downsized. (To see other bills introduced by El Paso County lawmakers, click here.)
After a morning of emotional testimony, committee members unanimously signed off on Looper’s HB1049. Looper’s bill moved to the House floor for consideration. If it wins approval there, it will head for the Senate.
The measure has broad support in the House, where members saw more than three dozen dealerships statewide lose franchises in downsizing by GM and Chrysler during bankruptcy restructuring last year. In Colorado Springs, GM wants to shutter Daniels, and Chrysler closed Lithia Colorado Springs Jeep.
A Chrysler representative and a lobbyist for major auto manufacturers testified that eliminating dealers was a consequence of the recession. El Paso County new vehicle registrations plunged 25.5 percent in 2009 to their lowest level in at least 30 years, according to the county clerk and recorder’s office.
Daniels said even with the downturn, her business was looking up. She is continuing sell Chevys pending the arbitration outcome.
“We were going to make it, now I’m not so sure,” she said.
A key part of Looper’s bill is aimed at businesses such as Daniels Chevrolet that have been forced to relocate and upgrade to keep franchise agreements with the automakers. Under pressure from GM to expand, Daniels moved from its historic downtown location in 1998 to a new $5.5 million lot on the 600 block of Automotive Drive.
Daniels said she’s now stuck with debt, and little compensation forthcoming if she loses her franchise.
Looper argues that dealers who lose their franchises should get cash from automakers to recoup their investments in things the carmakers required as a condition of selling their brand.
Gordon Nevers, a regional manager with Chrysler overseeing dealers in 14 states, said the bill would leave carmakers tied to underperforming dealers and stick Detroit for business risks assumed by franchise-holders.
“It absolutely ties the hands of the manufacturers,” he told the committee. “It cripples the manufacturers.”
Nevers said shedding dealers will help car companies recover from the downturn and emerge stronger. He said customers will get better service, and governments will see bigger tax revenues from enhanced sales with fewer dealers.
Committee members, including Colorado Springs Republican Rep. Larry Liston, dismissed the carmakers’ claims, saying that dealers should be left to succeed or fail on their own merits.
“Don’t you feel you have a moral obligation to these people who stuck with you?” Liston asked Nevers.
Daniels said that while she supports Looper’s bill, it likely won’t help her business, She said, though, that she wants to help protect other dealers who could face her situation in the future.
Meanwhile she’ll keep fighting to sell Chevrolets.
“I’m fourth generation,” she said after the hearing. “That’s what my family knows.”
