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SUBCOMMITTEE HEARING ON THE ROLE OF 

AUTOMOBILE DEALERSHIPS IN RURAL ECONOMIES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

SEPTEMBER 16, 2009 

Small Business Committee Document Number 111-045 

Available via the GPO Website: http://www.access.gpo.gov/congress/house 


Congress.#13
HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

DENNIS MOORE, Kansas 

HEATH SHULER, North Carolina 

KATHY DAHLKEMPER, Pennsylvania 

KURT SCHRADER, Oregon 

ANN KIRKPATRICK, Arizona 

GLENN NYE, Virginia 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

DAN LIPINSKI, Illinois 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

PARKER GRIFFITH, Alabama 

DEBORAH HALVORSON, Illinois 

SAM GRAVES, Missouri, Ranking Member 

ROSCOE G. BARTLETT, Maryland 

W. TODD AKIN, Missouri 

STEVE KING, Iowa 

LYNN A. WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

BLAINE LUETKEMEYER, Missouri 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KAREN HAAS, Minority Staff Director 

(II) 

STANDING SUBCOMMITTEE 

Subcommittee on Rural Development, Entrepreneurship and Trade 

HEATH SHULER, North Carolina, Chairman 

MICHAEL MICHAUD, Maine 

BOBBY BRIGHT, Alabama 

KATHY DAHLKEMPER, Pennsylvania 

ANN KIRKPATRICK, Arizona 

YVETTE CLARKE, New York 

BLAINE LUETKEMEYER, Missouri, Ranking 

STEVE KING, Iowa 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Shuler, Hon. Heath .................................................................................................. 1 

Luetkemeyer, Hon. Blaine ...................................................................................... 2 

WITNESSES 

Allison, Mr. Daniel, Allison’s Chevrolet, Sylva, North Carolina .......................... 3 

Thomas, Mr. Donald, Thomas Motors, Moberly, Missouri ................................... 5 

Ernie Goss, Ph.D., McAllister Chair and Professor of Economics, Creighton 

University, Omaha, Nebraska ............................................................................ 8 

APPENDIX 

Prepared Statements: 

Shuler, Hon. Heath .................................................................................................. 24 

Allison, Mr. Daniel, Allison’s Chevrolet, Sylva, North Carolina .......................... 26 

Thomas, Mr. Donald, Thomas Motors, Moberly, Missouri ................................... 29 

Ernie Goss, Ph.D., McAllister Chair and Professor of Economics, Creighton 

University, Omaha, Nebraska ............................................................................ 39 

(V) 

(1) 

SUBCOMMITTEE ON RURAL DEVELOPMENT 

ENTREPRENEUSHIP AND TRADE HEARING ON 

THE ROLE OF AUTOMOBILE DEALERSHIPS 

IN RURAL ECONOMIES 

Wednesday, September 16, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC 

The Subcommittee met, pursuant to call, at 10:09 a.m., in Room 

2360, Rayburn House Office Building, Hon. Heath Shuler [chairman of the Subcommittee] presiding. 

Present: Representatives Shuler, Dahlkemper, Bright, 

Luetkemeyer, Thompson. 

Chairman SHULER. I will now call this hearing to order. 

Earlier this year, the House Small Business Committee held a 

hearing examining how small parts manufacturers are faring during the reconstruction of the automotive industry. 

During today’s hearing, the subcommittee will look at another 

vital link in the automotive supply chain, automotive dealers. Traditionally, our domestic automotive makers will rely on a network 

of 20,000 local dealers throughout the Nation to sell vehicles to the 

American public. These entrepreneurs are the nexus between manufacturers and car buyers, making them a critical component in the 

overall automotive sector. 

These small businesses are also an important source of employment. Nationally, dealerships employ more than 1 million workers 

and support a payroll of $54 billion. On average, each new car dealership employs 54 people and supports a payroll of $2.6 million. 

These employees, in turn, spend their wages buying goods and 

services from local businesses. 

In rural areas, like western North Carolina, the economic role of 

auto dealers is magnified. Beyond providing a source of livelihood 

for their workers, these dealers also offer rural America an important service. Often, the closest dealership can be as far as 50 miles 

away. This means that dealers that choose to service rural areas 

are an important option for Americans looking to purchase new vehicles. 

These dealers also service vehicle warranties. In rural America, 

public transportation is often not readily available. In short, if you 

live in rural America, you are more likely to drive to work, to bring 

your kids to school, or to pick up groceries than if you live in a big 

city. And on average, the distance you drive is likely to be greater 

2 

than it is for Americans who live in congested areas or urban 

areas. 

Unfortunately, in recent years, automotive dealers have encountered unprecedented economic pressures. Plunging sales have hit 

all parts of the automotive industry hard. The number of cars and 

light trucks sold in the U.S. declined by almost 3 million between 

2007 and 2008. 

In 2008, things went from bad to worse, as a combination of rising gas prices, the credit crisis, and a recession put a serious pinch 

in automotive sales. The U.S. auto sales fell to a 26-year low that 

year, and the industry estimates sales could drop by 3 million more 

this year. 

Of course, automotive dealers are not alone in facing these challenges. All of the American automotive industry is undergoing significant reconstruction, and the entire sector is responding to this 

climate. GM is eliminating several brands. Both Chrysler and GM 

are closing plants and will employ fewer workers. During the first 

six months of this year, at least 15 auto parts suppliers have 

sought Chapter 11 protection, including the two largest suppliers. 

As the committee heard earlier this year, an increased number 

of small auto parts suppliers are going out of business. These 

changes are causing hardships in communities across this Nation. 

It is my hope that today’s discussion can highlight the importance of auto dealers in rural communities. While they are just one 

link in the chain of the automotive industry, the small businesses 

play a critical role in small town America. I think today’s hearing 

is timely, and I want to thank our witnesses for being here today. 

With that, I will defer to the ranking member, Mr. Luetkemeyer, 

for his opening statement. 

[The statement of Chairman Shuler is included in the appendix.] 

Mr. LUETKEMEYER. Good morning. 

And thank you, Mr. Chairman, for holding this hearing to examine the impact of the auto dealer closings on rural communities. I 

would like to extend a special thanks to each of our witnesses who 

have taken the time to provide this committee with their testimony. This is undoubtedly a difficult issue to examine. The health 

of the American auto industry is directly tied to the economic 

health of our nation. 

On a smaller scale, but no less important, the financial wellbeing of local auto dealerships, especially in rural areas, is very 

closely tied to the economic health of our own small towns and 

farm communities. Automobile manufacturers rely on an extensive 

network of approximately 20,000 independently-owned dealers for 

sales and service to their vehicles. Dealers provide the local connection between manufacturers and car buyers, and the dealership 

system is one of the several key players in the complex web of relationships that make up the U.S. automobile industry. 

While there is a consensus about the overall role and value of the 

dealer network, manufacturers and dealers have demonstrated that 

there is a wide gulf between them on the appropriate size of that 

network, the flexibility of the dealerships in running their business, and the GM and Chrysler visions of how the dealer network 

should perform going forward. 

3 

In June 2009, Chrysler eliminated 25 percent of its dealer network to 789 dealers. GM has announced it will reduce its dealer 

network from 6,000 to approximately 3,600 in October 2010 when 

its contracts with dealers from around the country are up for renewal. 

According to the National Automobile Dealers Association, the 

GM and Chrysler dealerships slated for elimination have more 

than 100,000 employees. This is a very important issue, especially 

for members who represent rural areas where there may have been 

only one or two GM and/or Chrysler dealerships to serve one or 

more counties. This could lead to drive times or tow times of well 

over an hour to get some service done. 

Additionally, given the abysmal employment statistics we have 

been seeing for well over 1 year now, this restructuring, while 

hopefully benefiting the nation as a whole in the long-term, will 

undoubtedly increase the numbers of unemployed workers. Clearly, 

closing dealerships will translate into job loss, an economic hit to 

many regions, particularly rural ones. 

The broader impact on the communities they serve must also be 

taken into consideration. For example, car dealerships are local 

businesses and pay billions annually in State and local taxes. They 

provide significant employment opportunities to the communities in 

which they operate. In addition, on average, each dealership makes $25,600 in charitable contributions to its community according to the NADA. From 

monetary donations to local charities to sponsoring the local Little 

League team, these activities, while harder to quantify, make dealers an integral part of their communities. 

I am looking forward to today’s testimony. And again, I would 

like to thank Chairman Shuler for holding this hearing and everyone for being here. I yield back. 

Chairman SHULER. Thank you, sir. 

Does any other member wish to be recognized for opening statements? 

We will now move to our panel. We will now move to testimony 

from our witnesses. Witnesses will have 5 minutes to deliver their 

prepared statements. The timer begins when the green light illuminates. When there is 1 minute remaining, the yellow light will 

come on. And when time is up, the red light comes on, but obviously, we have got a rather small hearing today, so we will be a 

little bit lenient on that. So hopefully you can fully explain your 

testimonies. 

Chairman SHULER. I would now like to introduce our first witness, Mr. Daniel Allison. 

He is the owner of Allison Chevrolet in Sylva, North Carolina. 

It was founded by Dan Allison, Senior, in 1935. From that time, 

three generations of Allison families have been involved in running 

the company. 

Mr. Allison, you will have 5 minutes to deliver your testimony. 

STATEMENT OF DANIEL ALLISON 

Mr. ALLISON. Thank you. 

Chairman Shuler, Ranking Member Luetkemeyer and committee 

members, thank you for your willingness to address these economic 

4 

impacts of the closings of automobile dealerships in rural communities. 

Thank you also for allowing me to present my views and to tell 

my story. My name is Daniel Allison, and I am the president of 

Allison’s Incorporated, a family-owned Chevrolet dealership located 

in Sylva, North Carolina, in the southwestern mountains of North 

Carolina. 

Our relationship with General Motors began in 1935, when my 

grandfather established Allison’s as an Oldsmobile dealership. 

From that time until recently, three generations of the Allison family have proudly and loyally partnered with General Motors. This 

partnership has been profitable for both GM and Allison’s. 

Small rural dealerships like mine offer automakers like General 

Motors an important competitive advantage. They are usually located in areas where there are very few, if any, new car dealerships, and most often no import car dealerships. 

Since 1935, Allison’s has supported the local economy by providing stable employment in one of the more economically depressed regions of North Carolina. Even today, when the unemployment rates in our market area range from 8.3 percent in Jackson County, and 9.7 percent in Swain County, to a high of 14 percent in Graham County, 16 people and their families depend on us 

to provide them with a good living wage and with much needed 

benefits, such as a health care plan and a simple IRA retirement 

plan. 

Our business generates significant Federal, State, and local tax revenues. In 2008, our annual payroll was over $670,000, and we 

paid over $233,000 in payroll taxes. We sold 150 new Chevrolets 

and 163 used vehicles. These sales generated over $147,000 in 

North Carolina highway use tax. Our service and parts sales generated over $25,000 in sales tax, and the property taxes we made 

were over $9,000. A good portion of all these taxes, of course, returned to our community through the services provided by the Federal, State, and local governments through their services. 

Allison’s, Incorporated, like all small rural dealerships, is of 

great economic importance to its local community. We do regular 

business with several local, regional, and national banks, with at 

least four local and State credit unions, with 10 or more local insurance agencies, three area radio stations, three community newspapers, three local auto parts stores. And in addition to this, our 

business and its employees spend money with our local grocery 

stores, building supply stores, restaurants, and other local retailers. 

Small rural dealerships and their employees provide critical support to the communities they serve by volunteering their time and 

contributing their money. As a part of the fabric of our community, 

Allison’s, Incorporated, and its employees have for 74 years supported our area schools, churches, hospitals, community assistance 

organizations, youth and high school athletic and music programs, 

as well as victims of disaster, disease, and economic loss. 

We are also regular supporters of Southwestern Community College and Western Carolina University. I was raised to believe that 

being a good neighbor and serving your community is the right 

thing to do. Doing so also makes good business sense, and it creVerDate Aug 31 2005 14:22 Dec 09, 2009 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\52262.TXT DARIEN
5 

ates tremendous goodwill for General Motors in our local communities. 

The relationship between automakers and their rural dealerships 

is mutually beneficial. Therefore, I hope that my dealership and 

the thousands of successful rural dealerships across America can 

continue helping their communities grow and prosper. On behalf of 

our dealership, its employees and customers, and of all small rural 

dealerships, I sincerely appreciate your time, interest, and concern. 

Thank you. 

[The statement of Mr. Allison is included in the appendix.] 

Chairman SHULER. Thank you, Mr. Allison. 

At this time, I will recognize the ranking member for the purpose 

of introducing his witness. 

Mr. LUETKEMEYER. Thank you, Chairman Shuler. 

Next up we have Mr. Don Thomas. He is the owner and president of Thomas Motors, Incorporated, in Moberly, Missouri. He has 

spent his entire life and raised his family in rural Missouri, has 

been a General Motors dealer for over 34 years, selling Chevrolets, 

Buicks, Pontiacs, Cadillacs, and GMC cars and trucks. 

Thomas Motors is a family-owned-and-operated business that recently renovated its entire operation, from the exterior of the building to the service department and the showroom. 

Welcome, Mr. Thomas. I look forward to your testimony. 

STATEMENT OF DONALD THOMAS 

Mr. THOMAS. Chairman Shuler, Ranking Member Luetkemeyer, 

and members of the subcommittee, thanks for having me. 

My name is Don Thomas. I am owner of Thomas Motors in 

Moberly, Missouri. I have spent my entire life in rural Missouri, 15 

miles from my dealership. I have been a GM dealership since 2005. 

We represent Chevrolet, Buick, Pontiac, Cadillac, and GMC. We 

have no non-GM brands. 

We are a family-operated business. We treat our customers and 

our employees fairly. I think that is reflected in our customer satisfaction scores of the dealership and the tenure of our employees. 

We comply with all the GM operational policies and procedures, 

and we compete fairly with GM and non-GM dealers. Sales have 

fallen since 1975 due to the overall decline in the domestic auto 

sales. But even in a down economy, our unit sales and profits are 

good. This year, to date we have sold 117 new vehicles, including 

our GM program cars in addition to our used cars. 

We have a modern, updated facility. Our location is excellent. We 

are on a new divided highway just a mile from the shopping center, 

just a mile south of the junction. We have got a new modern facility, updated facilities, 21,000 square foot. We have 12 service bays. 

Our showroom will accommodate five vehicles. We have 4 acres of 

paved parking. 

In 2000, GM came out with a project they called Image 2000 Upgrade, Project 2000. We have complied with that. We spent a little 

over $300,000 on our facility. In 2004, we finished the renovations; 

spent another a little over 200,000. We paid for that all out of the 

dealership profits. Our dealership is debt-free. 

Thomas Motors is the only dealership in a seven-county area. 

Those seven counties consist of approximately 200,000 people. The 

6 

local fire departments, schools, farmers, everybody around, they depend on us for service. Since July of this year, January to July, we 

have completed 2,600 repair orders for GM vehicles. Now I have 

calculated the distance if we weren’t here that those customers 

would have had to have driven to get the their respective car 

worked on, make and model, and they would have had to have 

driven in excess of 55 miles one way. I have talked to many of my 

loyal customers from Moberly and surrounding areas, and they said 

they simply would not drive, could not drive the 45 or 50 miles one 

way at minimum to get their car worked on. 

Randolph County is a population of 30,000 people. The income is approximately $40,000. It is a rural area, but it is a thriving area. 

Just across the street from us they just opened up a new Lowe’s 

home store, brought 120-some new jobs. They just opened up a new 

biodiesel plant in our town, the first one in our State, brought over 

a hundred-plus jobs. The hospital, which is right next door to us, 

just completed a big renovation. The airport, they added on; now 

it is a regional airport. Moberly has got a Ford Lincoln Mercury 

dealership. It has a Chrysler Dodge and Jeep dealership. The 

courthouse is here. It has two colleges, training center; prison is 

here. It has got eight major banks. It has got three radio stations. 

You know, it has got Norfolk & Southern has got a terminal here. 

There are seven or eight factories. There are approximately 7,000 

people working in Moberly. The elimination of Thomas Motors I 

think would have a very negative impact on the entire area. We 

have 25 employees. We hire some school help when school is out 

just to give them a job. Our payroll is in excess of a million dollars 

a year. 

In June of this year, I received a letter from GM saying that our 

franchise was going to be wound down by 2010. We can stay in 

business until then selling the cars we have. We can buy or dealer 

trade for 2010 units, but we can’t order from the factory. 

The thing that really concerns me when I get this letter, there 

is no objective criteria whatsoever how they made that decision. 

When GM filed bankruptcy, they filed in the U.S. Bankruptcy 

Court in New York. They told the Court they were going to use a 

dealership evaluation process. They would objectively consider the 

dealership sales, the customer satisfaction, the capitalization, the 

profitability, the dealer return on investment, the customer convenience, the drive-time metrics, shifting market demographics. If you 

look at that, look at those facts, we excel on every one of them but 

one. If we had known we had a deficiency in vehicle registrations, 

we could have corrected that. 

If they had only used the objective criteria that they said they 

were going to use, if they would look at us and use those criteria, 

there would be no question we would be there. Our profit the last 

10 years has been in excess of $275,000 a year when you add back 

our LIFO deduction and the excess allowable IRS deductions. Our 

capitalization is in excess of $1.5 million. That is a million dollars 

more than GM guidelines. Year-to-date this year, even in a down 

economy, our profit is in excess of $190,000. 

We live in a rural community. I don’t know how many ball 

teams, school uniforms, scholarships, all the things we contribute 

to. There is no telling how many dollars. You know, the school I 

7 

graduated from needed a van just here a while back. They didn’t 

have any money, so I just gave them one. I am sorry. We donate 

to everything. If we weren’t there, I don’t know what the Moberly 

community would really do. 

Those people can’t drive 50 or 75 miles to get their car worked 

on. You know, we provide the city with lost of their vehicles. Just 

the other day, they came out and asked me to bid four vehicles for 

the city. I couldn’t do it. I couldn’t bid them because we can’t get 

them. They said they don’t know what they are going to do. If we 

are gone, they won’t have competitive bidding. They have expressed great concern what they are going to do. They will just 

have to buy them because they can’t buy what they can’t get serviced, and the Ford dealer will get them all. 

You know, GM just came up with a deal here just the other day. 

I can’t understand it; they had a deal they are going to pay the 

General Motors dealers, that is the going-forward dealers, to upgrade their facility. They are going to work with GMAC to get them 

more floor planning. 

I have been running the business for 35 years. My place is paid 

for. I have done all the upgrades. I don’t need GM to help me with 

my floor planning. I got it. I mean, I don’t need their help. 

You know, I have done everything that GM has asked me to do. 

Our CSI score and our SSI score is above the zone; it is above the 

region. That is a questionnaire or survey that GM sends out to all 

the GM customers and gets feedback. We are ahead of them always. 

GMAC tiers their customers; that is the wholesale group that 

does floor planning for dealers. They have three tiers. We have got 

the highest rating GM offers. Since January of this year, General 

Motors has lost six dealerships within a 100-mile radius of me. And 

I can tell you, some of them have cost GMAC a lot of money. But 

still they want to pour more money into some of these dealers that 

can’t make it. I just don’t understand. 

I have tried to figure the reasoning, what GM could be possibly 

thinking about to get rid of a dealers that are making money, that 

are doing what they are supposed to do. I just dealer traded just 

in the last 3 or 4 weeks with some so-called going-forward dealers. 

Got a letter they are going to stay. They are going to stay in business. One of them, GMAC was holding their MSOs. I don’t know 

how in the world they are going to stay. Another one, GMAC had 

them cut off; they couldn’t take any cars back. Another one, GMAC, 

they were full. I could get their car, but they couldn’t take something back either. 

Now how in the world is General Motors going to take our tax 

money and put it in those dealers and help prop them up when 

they got dealers like me and I don’t need any of their help? I have 

done everything they have asked me to do. And I am selling their 

cars and making money. I got over a million dollars a year payroll. 

I just had a conversation just a few days ago with a branch manager of GMAC. He told me he had 200 dealers that he had sent 

demand letters to. He said a lot of those, some of those he said 

were going-forward dealers. He said they had to pay off within 30 

to 60 to 90 days. He said they can’t stay; they are going out of business, but part of them got going-forward letters. He said I have got 

8 

200 more on a watch list that are going to be cut off after that. I 

just don’t understand it. 

If I am gone, if I am out of Moberly, there will never be another 

GM dealer there. You know, it cost $2 million to build a dealership 

like mine. And where are they going to get the money? If they had 

the money, they wouldn’t put it in there, seeing what GM has already done to them. They are losing money. And if they had to go 

borrow the money, they wouldn’t do it. And GMAC—GM is working 

a deal with GMAC. Now they are going to help those dealers get 

more money. It is just going to take more tax money and throw 

good money after bad. 

If the dealers can’t make money, if they can’t stay, they can’t 

stay. You can’t keep propping them up. But if a dealer that is making money and doing business, why do they want to kick him out 

for? You know, we have got people that—I just did a deal just 

Thursday, I knew I was coming down here, to see how long it 

would take for a customer to go for his service. I had him start at 

the Post Office in Moberly and drive to Columbia. He left at 7:30. 

I told him drive down and turn around and drive back. See how 

long it took. It took him 2 hours and 10 minutes. If you ever went 

to Columbia, where there are 200,000-plus students, and tried to 

get there at work time and see how much traffic you got and how 

long it takes, how is a farmer going to go and do that? 

I mean, this is not just getting rid of me or Thomas Motors, it 

is the whole community. You know, I have got 25 people, that my 

payroll is over a million dollars a year. I don’t understand it. We 

have got a good business. I have excelled in everything GM has 

ever asked me to do. I need no help from them financially. My business needs no help financially. I got a new, modern place. Moberly 

is growing. They have got so much to offer. But still they want to 

get rid of us. And there will never be another GM dealer in 

Moberly if I am gone. Where are those people going? Ford is going 

to get them all. 

[The statement of Mr. Thomas is included in the appendix.] 

Chairman SHULER. Thank you, sir, for your testimony. 

Mr. THOMAS. Thank you for allowing me to speak. 

Chairman SHULER. Yes, sir. 

Our next witness is Ernie Goss. He is the MacAllister Chair and 

professor of economics at Creighton University in Omaha, Nebraska. Dr. Goss has published over 80 research studies focusing 

primarily on economic forecasting. Dr. Goss’s research spans local, 

regional, and national perspectives. He has done an extensive review of the American automotive industry. 

Dr. Goss, thank you for being here today, and I look forward to 

hearing your testimony. 

STATEMENT OF ERNIE GOSS, PH.D. 

Mr. GOSS. Thank you, Chairman Shuler, and distinguished members of the subcommittee. I want to thank you for inviting me to 

appear before you today to discuss the economic issues related to 

the closure of GM and Chrysler dealerships across the Nation. My 

testimony will identify some of the community benefits and costs 

associated with the closures. 

9 

Up to this time, the media has focused on the private cost and 

private benefits related to shuttering more than 1,900 dealerships 

across the U.S. For example, GM’s CEO Fritz Henderson recently 

claimed a savings of $928,000 per closed dealership. There was no 

mention of the cost or benefits to the public. To date, taxpayers have invested more than $64 billion in Chrysler and GM. And that doesn’t include GMAC and the suppliers as 

well. Currently, less than 1 percent of GM and Chrysler stock 

shares are held by investors other than the U.S. Federal Government. Thus both GM and Chrysler are essentially 100 percent, plus 

or minus 1 or 2 percent, taxpayer-owned. 

As public corporations, public costs and public benefits of corporate decisions must be an input into the decision-making, including the decision to shutter dealerships. These closures will result 

in a loss of thousands of jobs, both direct and indirect, and produce 

severe economic hardships in many communities across the country 

in the form of plummeting tax collections, tumbling charitable contributions, and sinking local real estate values. 

Losses will be particularly acute and difficult for small towns and 

rural communities of the Nation, where automobile dealerships are 

an integral part of the area economy. At this time, neither GM nor 

Chrysler is offering assistance to the affected communities or to 

closed dealerships, at least to my knowledge. This departs from 

GM’s 2004 dispensation of Oldsmobile, costing GM approximately 

$1 billion, with a significant portion of that $1 billion going back 

in the form of vehicle repurchases. 

With public ownership comes public responsibility. As such, the 

analysis of the closures must include the public costs and benefits 

of the dealership termination. Across the country, these dealerships 

employ hundreds of people in good-paying jobs. They support the 

infrastructure of many communities by sponsoring sports teams, 

raising funds for needy projects, and contributing to local charities. 

In many cases, the targeted dealerships have been a huge part 

of the community for generations. What I am contending is that 

both private and public costs be part of the decision-making process. Thus far, to my knowledge, there has been no cost-benefit 

analysis conducted as part of the dealer termination process. That 

is, while the private benefits may or may not exceed the private 

costs, there has been no explicit examination of the public costs, especially for rural communities where these dealerships are very important. 

I will provide a brief examination of one announced closure, one 

termination of Meyer-Earp Auto in Auburn, Nebraska, a community of 3,400 residents in southeast Nebraska. Each month since 

2005 I have conducted a survey of bank CEOs in rural parts of 10 

States with an average community size of 1,300. States included 

are Colorado, Iowa, Kansas, Illinois, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, and Wyoming. 

In May of 2009, I asked the bank CEOs whether dealership closures would have a significant impact on their area communities. 

In those communities slated for dealership closure, the impacts 

were judged as negative and very significant. In total, and this is 

total, one-third of the bank CEOs expect the closures to have a 

negative impact on their local communities. 

10 

In an effort to gauge the impact of just this one closure, I simulated the closure of Meyer-Earp using input-output analysis. According to my estimates, Auburn will lose, now this is a very small 

community, $680,000 per year in yearly sales, more than $260,000 

in wages and salaries, and in excess of $54,000 each year for selfemployment income. Additionally, the area will lose 6.8 jobs and 

tax collections of $77,000. And I am just including only new car operations there. 

In summary, the lack of analysis and transparency, the lack of 

analysis and transparency in the decision-making process is troubling and could produce costs to the public greatly exceeding the 

benefits. As stated by one Nebraska bank CEO in our May 2009 

Rural Mainstreet survey, this is his quote, ′′I have yet to see the 

real cost to Chrysler and GM in keeping rural dealerships open.′′ 

Mr. Chairman and members of the committee, thank you for having me here today, and I look forward to any questions that you 

may have. Thank you. 

[The statement of Mr. Goss is included in the appendix.] 

Chairman SHULER. Mr. Goss, thank you so much for your testimony. 

Really good testimony by a great panel here. 

And Mr. Thomas, our heart goes out for you. I know how much 

you have done for your community, and I can relate to growing up 

in a small town like that, as Mr. Allison has always performed just 

incredibly well when it comes to the youth programs and the arts 

and sciences and the athletics of our communities. When people 

need help, it is supplying those vans and sometimes just, you 

know, letting them use it for a day or so. I know how sometimes 

getting people to where they need to go means a tremendous 

amount. And when you have that type of payroll and you have that 

type of impact to a community, especially a growing community, 

wow. 

We actually had a Lowe’s going to go up in my hometown where 

I live now, but they said, no, it is just not going to—and we feel 

like we are a growing community. They said, well, just not now, so 

even though the property was already graded and ready to go. So 

that just goes to show to me that you are in a growing community. 

I guess, Dr. Goss, one of the first questions I have is, when you 

look at the overall impact in the communities, especially the rural 

areas, what is the impact to these communities when one dealership goes? And then to the people? I mean the things that we don’t 

hear about. You know, it is the buying the goods and services. 

What overall impact? How big a shadow does it cast when you lose 

a company such as this? 

Mr. GOSS. Well, Chairman Shuler, obviously, as Mr. Allison and 

Mr. Thomas have testified to, very significant. So the decisions of 

travel time, for example, that is not in the matrix of decision-making. And I think the biggest problem, one of the largest problems 

from my standpoint is lack of transparency. The banks that we survey are complaining loudly about, where is the analysis? Where did 

GM—it seemed to be arbitrary and capricious. But to your question, you have got retail sales, and the retail sales spills over into 

wholesalers, which spills over into restaurants, and so on and so 

forth. You have got very significant impacts. 

11 

And again, it is particularly large relative to the economy in 

these small communities where there may be no other dealership. 

In, for example, Auburn, Nebraska, there is no other dealership 

there. This is their dealership. And by losing their license, by losing the dealership franchise, it is going to be quite significant, and 

it will ripple across the community. 

But also you have got in this part—that part of the country, I 

should say, the part I live in, you have got farmers who use the 

dealerships as well for buying parts for repairs that doesn’t really 

show up, in my analysis, and I would argue doesn’t show up in GM 

or Chrysler’s analysis. But I have to say, I have yet to see Chrysler 

and GM’s analysis. This, again, we have gone from—we went from 

$11 a barrel oil in 1998 to $147 a barrel last year. In other words, 

we have got this very large volatility in lots of factors, yet we are 

making decisions, or GM and Chrysler is making decisions that 

will last forever for these communities. 

These are communities in the middle section of the country, perhaps not on the East Coast and North Carolina, but in Missouri 

and Nebraska, where population losses are quite significant and 

something we need to pay attention to, and depopulation. So this 

is another nail in the coffin, in some cases, for some of these communities. And again, without transparency, without analysis, we 

are talking about two corporations that got $64 billion, yet we, at 

least I haven’t and the bank CEOs that I survey have not seen, 

what is the analysis? Where is the cost? You are taking taxpayer 

money, yet you have yet to show to the public where you are giving 

back. In other words, this looks like a taking. 

Now I am talking about the bank CEOs that I survey. I am coming at it as an economist, pretty sterile, as you can probably imagine but nonetheless trying to get at it. And even I have yet to see 

the analysis. I mean, maybe GM and Chrysler can show that, but 

it is yet to be—those out there, those of us in the hinterland have 

yet to see it. 

Chairman SHULER. Well, and unfortunately, in small communities I think these two gentlemen have stated obviously their financial strength and not having debt. But if there are some of 

these communities, I guess the TARP funding is there for some of 

the people from the banks that are going to be having to lose obviously the revenue and when they are not having the businesses, 

not having—no one—the dealerships not able to pay the loan back. 

So, obviously, we have certainly created a mess, no doubt about it. 

Mr. GOSS. And speaking of the TARP revenues, sorry for interrupting there— 

Chairman SHULER. That is all right. 

Mr. GOSS. —but a lot of the feeling out there, at least I do three 

surveys of purchasing managers and bank CEOs, a lot of the feeling is that we have done business, yet we have gotten no TARP 

funds, and now we are being, in the case of auto dealerships, being 

punished even though we are a viable, going concern. Show us, 

where is the analysis? Show us why this is happening, because 

again, as Mr. Allison and Mr. Thomas have demonstrated, or at 

least discussed, playing by the rules, not getting TARP funds, yet 

being shuttered anyway. That message is getting—is loud and clear 

12 

in our surveys each month. So I am very concerned about, without 

transparency, without any analysis, at least from what I have seen. 

Chairman SHULER. Mr. Allison, can you talk briefly about the 

process that you are having to go through now and some of the obstacles with your employees and the benefits that they have and 

health insurance? And can you just briefly touch on that? I know 

you told me the story about how you kind of read the FedEx with 

your employees and kind of the openness that you had with all 

your folks. 

Mr. ALLISON. Yes, sir. 

Thank you for the question. The first thing is I guess we pride 

ourselves on offering not just a good wage but a complete, or as 

complete as possible, benefit package. We try to stay at least with 

the competition both in the industry and, you know, the other similar industries in our community and most of the time try to have 

a better package so that we can attract the best people. 

With that being said, Mr. Thomas’s experience I am sure has 

been multiplied, you know, countless times with a lot of us dealers. 

And we are no exception. The way that we were notified that we 

wouldn’t go forward with GM like the other dealerships is that 

they literally delivered the letter via FedEx. And in Sylva, North 

Carolina, that FedEx comes right to the door of Allison Chevrolet, 

and right up to the cashier’s window. So everyone that is in the 

dealership, employees and customers, immediately knew about it. 

When it came in, I was actually with my son at the doctor’s office 

in Asheville, which is about 50 miles away. And the office manager 

called me and said, we got a letter, got a FedEx. And I said, well, 

I am just about finished. If you would have people just patiently 

wait, and I will be there in about an hour. 

So when I got there, I said, give me just a few minutes and let 

me read through this letter, and then we will talk about it. So we 

kind of chose to do something differently than maybe GM had suggested, which was to hold that information kind of close to your 

chest. I felt like the most honest and fair thing I could do with the 

employees and the community was just tell the truth. And so, with 

that, we have kind of embarked on the process, which has been 

somewhat lengthy and definitely harrowing, of trying to appeal. 

And these appeals are made really just through e-mail and to we 

don’t know who. 

Chairman SHULER. What is the actual cost? I mean, how much 

do you give back to the auto manufacturer, the automaker versus 

how much you actually cost them? I am only assuming there has 

to be some costs relative to what every dealership actually costs 

the maker, automaker. 

Mr. ALLISON. That is the thing that I fail to see. On a monthly 

basis, we pay for all kinds of things that relate us to GM. We actually pay for delivery of our parts to repair cars from General Motors. We pay for our service training, for our sales training. We 

even pay to go to a dealer meeting. If we don’t send someone that 

we have signed up for service training, then we are charged a fee, 

a no-show fee. We pay for every poster, every piece of literature, 

sales literature. We pay for the books that we train ourselves out 

of and use as a comparative analysis for, you know, to talk to the 

customers with. We pay for using the ability to communicate via 

13 

the computer with General Motors, to record our sales and to order 

our parts and that kind of thing. So I don’t know, it probably runs 

on an average month a little over $3,000. 

Chairman SHULER. That you pay them? 

Mr. ALLISON. Yes, sir. 

Chairman SHULER. And how much do you think you are costing 

them a month? 

Mr. ALLISON. I fail to see that I am really costing them anything. 

Our relationship, as far as their calling on us, is through the telephone. 

Chairman SHULER. So when they deliver a vehicle, you have basically paid for it then? 

Mr. ALLISON. Yes, sir. 

Chairman SHULER. So whether you sell it or it sits on the lot for 

10 years, it really is no impact to them. 

Mr. ALLISON. That is exactly right, other than the fact that, to 

be fair, that if we didn’t sell it and had an accumulation of those 

vehicles, ultimately we wouldn’t order any more. 

Chairman SHULER. Right. Got it. Have you ever failed to have 

someone—vehicles on your lot for an extended time far exceeding 

what you expected to order? I mean, obviously during this last couple years, it has been very difficult. 

Mr. ALLISON. Yes, sir. And occasionally you will get a vehicle for 

whatever reason that just seems to stay. But for the most part, 

they move rather quickly. 

Chairman SHULER. At this time, I will yield to the ranking member, Mr. Luetkemeyer, for his questions. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

Follow-up with Mr. Allison. Do you sell any other brands of vehicles? 

Mr. ALLISON. No, sir. Just GM presently. 

Mr. LUETKEMEYER. Just GM products. What is the size of your 

market area that you have? You said six counties, I think you said? 

Is that right? 

Mr. ALLISON. It is actually three counties. It is the majority of 

Jackson County, all of Swain County, and the greater portion of 

Graham County. 

Mr. LUETKEMEYER. Do you have a population figure on what 

all—how much—how many people it would be? 

Mr. ALLISON. Jackson County is about 39,000 people. About 

60,000 or 64,000. 

Mr. LUETKEMEYER. What is the average length of employment 

for someone who has been with you? 

Mr. ALLISON. I have employees that have been well over 20 

years. I think the youngest as far as service is probably 2 years, 

year-and-a-half. 

Mr. LUETKEMEYER. Okay. So, in other words, you have been 

there a long time? 

Mr. ALLISON. Yes, sir. 

Mr. LUETKEMEYER. People who work with you have been there 

a long time. 

Mr. ALLISON. Yes, sir. 

Mr. LUETKEMEYER. They are well trained. You pay for the training. 

14 

Mr. ALLISON. Yes, sir. 

Mr. LUETKEMEYER. At this point, you don’t really cost the company any money per se. 

Mr. ALLISON. No, sir. 

Mr. LUETKEMEYER. Let me follow up with a question, Mr. Chairman, here. At what point do you actually purchase the vehicle? 

When it comes off—if you have ordered one, at the point that it 

comes off the assembly line, do you own it or when it comes on 

your lot? 

Mr. ALLISON. It is actually shortly thereafter being assembled. So 

shortly after it has come off the assembly line, then we have purchased the vehicle. 

Mr. LUETKEMEYER. Okay. So the company charges your account, 

I assume? 

Mr. ALLISON. Well, generally if you pay for it in cash, they 

charge your account. If you are paying for it, like I do, through 

General Motors Acceptance Corporation, or GMAC’s floor plan, 

then they charge your floor plan. 

Mr. Luetkemeyer. Okay. Okay. Very good. 

Mr. ALLISON. Yes, sir. 

Mr. LUETKEMEYER. Mr. Thomas, I know that you have been also 

been profitable. What is the average length of your employee employment? 

Mr. THOMAS. I have three people that have over 30 years. I have 

seven people that have got over 13 years. I got three with over 10. 

Mr. LUETKEMEYER. What do you think the average wage is of 

your employee? You said you had a million dollar payroll? 

Mr. THOMAS. Oh, $40,000, they will average $40,000. My salesmen in the high 50s. My service manager and parts manager in the 

high 40s. Our techs all in the 40s. Our lowest paid would be naturally the boys in the cleanup department, and they will make in 

the 20s. 

Mr. LUETKEMEYER. So I think you said a while ago the average 

citizen’s income in your area was $40,000? 

Mr. THOMAS. $40,000. 

Mr. LUETKEMEYER. So most of your employees are average to 

above average? 

Mr. THOMAS. All of ours with the exception of the three folks in 

our used car cleanup department. But all of our people will—yeah, 

I have got, oh, five or six that make well over 50. 

Mr. LUETKEMEYER. Okay. What kind of impact is there going to 

be on those lives? 

Mr. THOMAS. I don’t know. They don’t have a place to go. They 

won’t have a place to go. They will have to go to—I don’t know 

where they would go. They would have to go to Columbia would be 

what I would assume would be the closest place, and that is, you 

know, an hour and something. I don’t know where they would go. 

Mr. LUETKEMEYER. You also don’t sell any other brands, is that 

right? 

Mr. THOMAS. GM is all I have. 

Mr. LUETKEMEYER. Okay. Very good. 

Dr. Goss, where do you think this needs to go? I mean, you have 

studied this. You have seen that basically there is no cost to the 

15 

car companies for the dealerships, yet they are canceling dealerships. 

You know, I have got a little bit of a financial background. And 

to me, when you have a manufacturer, you need to have a distribution system. I mean, it is a pretty important part of being able to 

sell your product to have a distribution system. 

You know, we were talking to Mr. Thomas this morning before 

the hearing, and he was telling us, you know, and in his testimony 

as well, how difficult it is going to be for people to buy his particular brand. There is going to be a void there. Other dealers may 

come in, but there is some, you know, brand loyalty there. Where 

do you see this going as far as, are these companies just going to 

fall back and retrench, or are they making some really bad business judgments here by cutting their distribution system off? What 

do you think? 

Mr. GOSS. Yes, sir, I don’t think it be would the first time GM 

and Chrysler have made some bad decisions, if I may say that. And 

of course, I believe at least—now, again, the problem I have, and 

I think most economists and most representatives have, is, where 

is the analysis? Where is the transparency? And the motivation, at 

least looking at it from GM’s standpoint and Chrysler’s standpoint, 

is economies of scale and the ability to reduce competition between 

dealers, and thus what we call in economics get the consumer surplus. In other words, the consumer surplus that goes now to the 

consumer would now go to GM and Chrysler, which of course we 

in economics don’t think highly of that. We like competitive markets. So my concern is that this reduces competition. And certainly 

I think that is the intent, one of the goals is to reduce competition, 

what they see as economies of scale. 

I don’t know if there is economies of scale in terms of dealerships. They have yet to show the analysis, the transparency. And 

from the non-economist, even for the economists and the dealers 

out there that are being closed, but especially the individual has 

yet to see, well, why? What is driving this? Where is the transparency? Why is my dealership going and another is staying? 

The travel times, as Mr. Thomas has indicated, are quite significant. The impact that is not even a part of it is the farmers who 

in fact do get repairs at many of these dealerships, at least in the 

mid-section of the country. So I think, again, that that is the motivation. And the impact, unfortunately, for the consumer is going to 

be certainly negative. There is no way you can reduce the number 

of dealerships and have the consumer better off. 

Mr. LUETKEMEYER. One other follow-up question before I finish 

up here. You talked about the lack of competition. I realize there 

are other automobile options out there. However, in a lot of rural 

areas, they are limited. So therefore, does this, because of the lack 

of competition, do you see the opportunity for increased prices on 

other makes and models than in a certain area? Is that a possibility, or is that—because of the other competition that is available 

that would not occur? 

Mr. GOSS. Yes, sir, not just a possibility; it is going to happen. 

That, again, I think is a lot of the motivation for what is going on 

here. And that is certainly a concern as an economist. And back to 

my point about the volatility that we have seen, and we are makVerDate Aug 31 2005 14:22 Dec 09, 2009 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\52262.TXT DARIEN
16 

ing decisions for generations. In other words, these dealerships 

have been in business for generations, yet GM and Chrysler are 

making decisions that will be with these communities forever. And 

the idea that somehow another dealer will come in, many of these 

communities will not see that. For example, in Auburn, Nebraska, 

the community I discussed, it is very unlikely, or I would say somewhere between a zero and 10 percent likelihood that there will be 

another dealership that will replace the one that is closed. 

Mr. LUETKEMEYER. If Mr. Chairman would indulge me one more 

minute, just one follow-up question with regards to the appeals 

process that you gentlemen have to go through or are trying to attempt to work your way through, is there a process set up that you 

can present your case? Is there a board of review? Is there a group 

of people that you can talk to? Is there an individual that will 

make it? Or is it just a fiat from above that has been dictated to 

you and this is what it is going to be? 

Mr. THOMAS. That is it. 

Mr. LUETKEMEYER. That is it. 

Mr. ALLISON. Yes, sir, thus far, that has been the outcome. 

Mr. LUETKEMEYER. So regardless that you are profitable, made 

sales quotas, all the other criteria that they look at and judge the 

quality and capability of your agency to survive and deliver quality 

service, those things are not able to be discussed with anybody at 

a higher level and appeal their decision? 

Mr. THOMAS. No. 

Mr. ALLISON. In one of my e-mail communications that I sent to 

General Motors, I literally asked them, is there someone I can 

speak to, a person? And would you be willing to come down and 

talk to me? And really those questions weren’t answered directly. 

Mr. LUETKEMEYER. Well, Mr. Chairman, from the standpoint 

that we are looking at the impact on rural areas, and these gentlemen have got good numbers from the standpoint of customer service, it looks like we have certainly got some work to do. 

Thank you, gentlemen, for your testimony. 

Thank you, Mr. Chairman. 

Chairman SHULER. Thank you, sir. 

At this time, I would like to recognize Mr. Bright from the great 

State of Alabama. 

Mr. BRIGHT. Thank you, Mr. Chairman, for this opportunity. 

Thanks for this hearing today and the testimony. 

Guys, thank you all greatly for the testimony that you have 

given us today. It is kind of awakening to hear your testimony. And 

I don’t think there is a person in this room today that can testify 

or even say that it is a mystery to us as to why Chrysler and GM 

is in the shape today that they are in. Making decisions like they 

have made as it relates to each one of your dealerships is unconscionable. 

And Dr. Goss, thank you for your testimony, too. And I would 

like for you, if you would, to tell me if in the communities that you 

have seen and investigated out there you have seen any Federal 

stimulus moneys or anything invested by GM or Chrysler in these 

communities to offset the value and the benefits and the assets 

that these two dealerships will take with them when they quit selling the GM product out there or the Chrysler product out there? 

17 

Is there anything that you have seen during your investigation to 

substitute for those benefits? 

Mr. GOSS. Each month we do a survey of three—we do three different monthly surveys of about probably 15 States, and we ask 

that very question. And the answer is about 10 to 15 percent respond yes, so that is meaning 85 percent say no. So that is one of 

the real issues that they see, the bank CEOs, purchasing managers. And these are all businesses that we are surveying, not consumers. 

Mr. BRIGHT. Dr. Goss, thank you very much. 

Mr. Thomas, Mr. Allison, thank you for your time today. Thank 

you for your very valuable testimony. It is awakening. And people 

need to pay closer attention to what you have had to say here 

today. 

And I really tend to look closely at what, and Mr. Chairman, 

what we need to do is investigate closely the analysis used by GM 

and Chrysler in making these decisions. And if it is determined 

that they are creating areas of competition out there, or eliminating and shaping competitive districts out there by way of taking 

away the livelihood of dealerships like Mr. Thomas and Mr. Allison, I think that breaches on criminal activity as far as I am concerned. And that is all I have to say. 

And Mr. Chairman, thank you very much again for this hearing. 

And I will yield back the remainder of my time. 

Chairman SHULER. Thank you, sir. 

At this time, I would like to recognize Mr. Thompson from Pennsylvania. 

Mr. THOMPSON. Thank you, Chairman, and thank you ranking 

member, for putting this hearing of this subcommittee together. 

And you know, Mr. Thomas, Mr. Allison, having grown up in a 

small family-owned business, it wasn’t a car dealership, but knowing what a central role I am sure you have in your communities, 

my heart goes out to you with this being imposed upon you pretty 

arbitrarily by the looks of things. 

You know, I scratch my head, and I wonder about an economic 

model that abandons successful, proven businesses with a track 

record. I just don’t understand. And we have had this impact in the 

Fifth District of Pennsylvania as well, so I appreciate the opportunity to begin to try to understand. 

I will start with Dr. Goss. Is there any transparency at all of 

what criterion has been used? And you know, given the fact in your 

statement we are—you know, GM and Chrysler are 100 percent, 

plus or minus a couple percentage points, government-owned, is 

there any transparency in terms of what criterion was used, and 

who is making these decisions? 

Mr. GOSS. I have yet to see it. Now, that doesn’t mean it doesn’t 

exist. But I have yet to see that analysis. And the problem, as I 

see it, is the reduction in competition that is going to result, that 

will result in higher prices to the consumer, and the idea that there 

are economies of scale. But with the speed that this came down, 

I am really concerned that there was not any analysis, that it was 

done by some sort of math. I have no idea if that is what it was. 

And saying there is no—let’s eliminate this dealership, that will 

provide more business for this dealership that is 35 miles over, and 

18 

that is probably the way it was done without any serious look, examination of what it does to the communities that are affected, 

what it does to the profitability of the dealerships, but more I 

think—and again, I am not—I am a little suspect of any analysis 

that may have been done because of the speed that we would have 

had to have seen. This came in May. I think Chrysler’s decision 

was in May. So this was very quick. [11:08 a.m.] 

Mr. THOMPSON. You made a statement that really there was no 

cost-benefit analysis. And the question in terms of even the capturing market share, Thomas Motors sounds like you are going to 

drive at least 2 hours for somebody who wants to buy a vehicle 

that is readily available in that radius that you service today. 

I just throw this out there. I represent a very rural district, as 

a lot of my colleagues do. Is there any bias towards closing rural 

dealerships? Any evidence of that? 

Mr. GOSS. I don’t know that for certain, but I would suspect that 

there is that bias. And, of course, what it results in is a cost that 

is borne by the consumer by traveling greater distances which will 

be, I think—according to GM and Chrysler, they would get to put 

that into their price, the new dealership, the ones that the individual, the businesses will have to make use of. And so I think that 

is the intent. 

But I would question even that. I am just not certain that there 

has been any really analysis, even from the private benefit and private costs, let alone putting in the public benefit and the public 

cost. 

So, again, the swiftness with which this took place makes many 

of us question the decisions. 

Mr. THOMPSON. Mr. Allison, you had talked about, within the appeal process was rather anonymous. You send an e-mail you don’t 

know where it went to, and that is an anonymous way to communicate. We all probably get those kinds of e-mails and people don’t 

give their names when they give us feedback. But it is said that 

now that you are dealing with a company that is, say, 98 percent 

government owned and you get that—here is my question. 

Was that—and you all, you both have had decades, generations, 

of experience, of dealing with communications with GM in particular. 

Was that type—is that the standard that you experienced pregovernment involvement with GM? 

Mr. ALLISON. No, sir. And I was not quite technically correct. 

There was a telephone contact set up that literally explained to 

you step by step, but there really wasn’t any full explanation. They 

were very limited in what they could tell you. 

Mr. THOMPSON. Okay. 

With the chairman’s indulgence, I wanted to take a little different direction, Dr. Goss, for those who have not been voted off the 

island—maybe they have been watching too many reality shows— 

those who are going to be participating. I have talked with some 

of those dealers, as well, and two specific things I wanted to get 

your reaction to if you are familiar with them. 

One is participation agreement—actually, that rolls into one 

question—I wanted to see what you are hearing about that. I am 

hearing—you know, dealers—that the new GM, to participate, you 

19 

are going to have to build new facilities, you may have to invest 

capital in the showroom. If you happen to have a foreign line of 

cars that you have always carried also, that that is being shoved 

out and you are being dictated that you no longer continue, at least 

within your showroom, that line of business. 

And that kind of rolls into pushing because of government involvement, now that the State laws are circumvented with the 

State franchise requirement; and I wanted to get your reaction to 

those. 

Mr. GOSS. That is certainly the case, Mr. Thompson. And I am 

not a lawyer, but nonetheless, it looks like, at least at certain levels, there may be violations of the antitrust laws whereby GM or 

Chrysler is eliminating competition. And that does work against 

the consumer, and at least work for those two companies. 

But you are talking about eliminating the profitable dealerships. 

I know I am repeating myself, but in an effort to capture that— 

the consumer surplus, as we would call it; in other words, consumers having now to travel greater distances—the goal would be 

for GM and Chrysler to, in fact, capture that. I argue against that. 

But, secondly, I am not certain they calculate those things very 

accurately, given the speed with which it was done. 

So there are many problems there, but chief among them is the 

fact is these are public corporations now, $64 billion, yet decisions 

have been made that seem to be contrary to the public interest, at 

least on the surface. 

Mr. THOMPSON. Thank you. 

Thank you, Chairman. 

Chairman SHULER. Thank you. 

At this time would like to recognize the gentlewoman from Pennsylvania, Mrs. Dahlkemper. 

Mrs. DAHLKEMPER. Thank you, Chairman Shuler, and thank you 

for convening this critical hearing on the role of automobile dealerships in rural communities and, really, throughout this country. 

And I want to certainly thank the panel of witnesses for your testimony today. It has been very valuable for us to hear your personal stories, as well as you, Dr. Goss, to look at things on a larger 

scale. 

Since I had my first phone call from one of my dealers, I have 

been trying to understand this issue, and trying to understand exactly how this occurred. And as we seem come today with no conclusion as to exactly what kind of business model was looked at to 

make these determinations. And personally, my brother-in-law was 

an executive at Chrysler for many years, and he and I argued 

many times about the business model that they were using. I argued for about a dozen years, before he finally left the company, 

about the business model they were using and where they were 

going. 

I have a couple of questions for you, and I just want to try to 

understand. Would you, Mr. Thomas and Mr. Allison—first of all, 

when are you looking at time frame for closure of your dealerships? 

Mr. THOMAS. 2010. GM says 2010 is when they expect our winddown. We can’t order any new 2010 model vehicles. We can stay 

in business, and they say we can buy them from another dealer. 

20 

Mrs. DAHLKEMPER. You have 2009s, but you cannot get any 

2010s, which are probably coming out or have come out already? 

Mr. THOMAS. That is right. The only way we can get 2010 vehicles is to get them through another dealer. 

Mrs. DAHLKEMPER. So they are not selling any new product? 

Mr. THOMAS. None. 

Mrs. DAHLKEMPER. So you will wind down next year? 

Mr. THOMAS. 2010. October 2010. 

Mrs. DAHLKEMPER. But you may not be able to keep your doors 

open that long because you won’t be able to get new product, basically? 

Mr. THOMAS. Unless we buy them from other dealers. 

Mrs. DAHLKEMPER. Mr. Allison? 

Mr. ALLISON. Yes, ma’am, that would be the same for us. 

Mrs. DAHLKEMPER. Could you and would you consider selling a 

different brand? 

Mr. THOMAS. I have been offered an import, but I don’t want to 

do that. 

Mrs. DAHLKEMPER. Why? 

Mr. THOMAS. Well, I have been with GM 35 years. Our customers, our community, depend on GM vehicles. I don’t want to 

start switching them and try to go to—I just don’t want to do it. 

I don’t want to retrain our employees. I don’t want to change our 

customers, GM loyal people. I think they are going to change, but— 

Mrs. DAHLKEMPER. You mentioned the Ford dealership, and you 

think they will go to Ford because there is—obviously, convenience 

being probably the biggest factor there. 

Mr. THOMAS. Exactly. Exactly. 

Mrs. DAHLKEMPER. Do you think there will be another individual 

in your town who would say, Well, Mr. Thomas is not here any 

longer and there is only Ford, so I am going to come in and I am 

going to sell—you know, whoever, Honda, Toyota, whoever? 

Mr. THOMAS. I don’t think that there will be another dealer— 

never is a long time, but I think in this environment, in this economy, I think it is going to be a long time before this economy 

straightens out. And the cost now to start a new dealership would 

be prohibitive. 

Mrs. DAHLKEMPER. Mr. Allison, can you comment on that? 

Mr. ALLISON. Yes, ma’am. I, like Mr. Thomas, if we don’t go forward with General Motors, there would only be Ford in our town. 

And I agree, the costs would be astronomical to establish a brandnew dealership from scratch. 

Mrs. DAHLKEMPER. Can you use your same facility if you wanted 

to? You own that building, right? 

Mr. ALLISON. Yes, ma’am, we do. 

Mrs. DAHLKEMPER. So you certainly could, but you would have 

to retool. 

Mr. ALLISON. That would be an option. But like Mr. Thomas, 

probably the most loyal General Motors dealers are the small dealers. We literally eat, breathe and live GM. 

Mrs. DAHLKEMPER. I guess my question is, then, as you were— 

as we were looking at the automobile industry in this country failing really in their business model, did you have any concerns about 

that, long term? Were you concerned about where the business 

21 

model was going as we see our foreign competitors were take a bigger and bigger share of the market? 

Mr. THOMAS. Yes, I do. 

Mrs. DAHLKEMPER. I guess I am just trying to understand the 

loyalty. If you can explain that to me a little bit, why you would 

not go with some other dealer. 

Mr. ALLISON. I certainly would not close out that alternative at 

all. But it is just that my first wish would be to continue forward 

with General Motors, as would the people in our community and, 

certainly, our employees. 

Mrs. DAHLKEMPER. Dr. Goss, do you have any comment on this, 

because you seem to know a lot of what is going on in many different areas. 

Mr. GOSS. Well, at this juncture, as everyone in the room knows, 

this is a tough time for the economy. 

These decisions are being made at a critical time for many of 

these communities, and many of the communities that we survey— 

I survey 15 States, a lot of rural areas—they are under tremendous 

stress, and this is just another nail in some cases in the coffin. And 

I am not certain you can move that quickly and not suffer some 

significant long-term generational impacts. 

Mrs. DAHLKEMPER. There is a piece of legislation—there are 271 

sponsors on it—that I have signed on to called the Automobile 

Dealer Rights Restoration Act of 2009. Are you familiar with that 

piece of legislation? 

Mr. THOMAS. Yes, I am. 

Mrs. DAHLKEMPER. Obviously, there are many in this Congress 

that are concerned. I have many dealerships in my district that 

have closed, and I am continuing to try to understand. Staying on 

it—my time is expired, but what would the costs be if you wanted 

to start up a new dealership with a different brand? Just—can you 

give me kind of a ballpark? 

Mr. THOMAS. I talked to one that—out-of-pocket, about $700,000 

for the one I talked to for their initial package. That does not include inventory. That includes training, signage, some of the equipment they require you to buy. The initial package, about $700,000. 

Your facility has to meet their specifications, so you have to 

change, redesign and make your facility meet theirs. Like GM, GM 

wants theirs to all look the same. You would have to do the same. 

I would have to do, not the same thing I did to my building in 

2000. But I would have to redo it, reshape it, recolor it. And my 

building is all stucco. I would have to redo all the signage, all the 

fascia. 

Mrs. DAHLKEMPER. So basically the investment that you put 

there, there is no value to that? 

Mr. THOMAS. No. 

Mrs. DAHLKEMPER. And you would have to outlay a very, very 

large sum of money? 

Mr. THOMAS. Well, based on the one that I have looked at is 

$700,000. 

Mrs. DAHLKEMPER. Have you looked at anything Mr. Allison? 

Mr. ALLISON. Yes, ma’am, and my experience is similar to Mr. 

Thomas’. Obviously, the outlay would be—we already have faciliVerDate Aug 31 2005 14:22 Dec 09, 2009 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\52262.TXT DARIEN
22 

ties, so it would be to retrofit or change the facilities to meet their 

requirements. 

Mrs. DAHLKEMPER. Thank you very much for your testimony. 

Thank you, Mr. Chairman. I yield back. 

Chairman SHULER. Thank you. 

I think one thing that really struck me in the testimony was loyalty. You guys have one store, one location. Most of the big dealers 

have, what, multiple? I mean, some of them are very close friends 

of mine. They have multiple dealerships, multiple brands, foreign 

and domestic. 

So you decided to stay with that American-made vehicle. Hopefully, these dealerships that are in front of us—and maybe there 

are some automakers’ representatives here today. That goes a long 

way with me, people that are going to be loyal to a particular 

brand, to service them with the integrity and character that I know 

that Mr. Allison has had. I am sure Mr. Thomas has, as well. 

That goes a long way with me, and hopefully that can—that will 

go a long way with the automakers. So we have a lot of work to 

do, I think. 

As you can tell, there is minority on one side and majority on the 

other, and you probably couldn’t tell with the question which side 

anyone was on from the standpoint—this is not political, this is 

about creating jobs. 

I mean, the bailout happened. I guess it is all the more reason 

that I think my vote was right when I didn’t vote for the bailout, 

because it is about families, creating jobs. And maybe I don’t fully 

understand it, and hopefully I will get educated, as well, from the 

understanding—from the automakers’ standpoint. Maybe that is 

where I need to educate myself for the reasons of why they are 

being shut down. It is hard when we have great testimony from 

you to understand that analogy. 

So when it comes down to making sure that we have representatives in our communities, three generations and a fourth that is 

here today, I hope. I know your son is here today. Hopefully. That 

would be a fourth generation to be able to sell that GM product. 

Mr. ALLISON. Yes, sir. 

Chairman SHULER. We need to make sure. 

And one of the things we need to do is make sure—we have to 

ensure—I don’t want us to lose GM, Chrysler, Ford; that would be 

devastating to our country. We need to continue to produce things 

in this country. We far import way too much. And so I respect your 

loyalty more than anything and what you have given back to our 

communities. 

And so, does any other member have any other follow-up questions or comments? 

But I do want to thank you all for your participation. And I hope 

I get educated so—on some of the things, and maybe I can relay 

some of the messages to you. That will be part of—we will all try 

to gather as much information to educate ourselves. There are always two sides to the story, and I want to be able to see both sides 

and understand the issues that we have in front of us. 

But loyalty goes a long way for me. So, hopefully, you guys will 

get an appeal process that will be beneficial to you, long term for 

the families and the people of the community. 

23 

I ask unanimous consent that the members will have 5 days to 

submit statements and supporting materials for the record. 

Without objection, so ordered. This hearing is now adjourned. 

[Whereupon, at 11:28 a.m., the subcommittee was adjourned.] 

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