DENVER—Republican and Democratic state lawmakers are vowing to pass legislation aimed at protecting Colorado dealerships terminated by GM and Chrysler.
Carmakers can require dealers to make upgrades in their businesses, some costing millions of dollars, and the bill would require manufacturers to reimburse dealers for those expenses over the past five years.
Dealers also would get a right of first refusal if the manufacturers later award another franchise nearby.
The bill passed the House by a vote of 60-5 and next faces a committee hearing in the Senate.
GM launched an ad campaign Friday against the legislation.
The carmaker, which has received $52 billion in federal aid, said those requirements could threaten its ability to return to profitability and force it to give business to poor performing dealerships.
Its $60,000 radio and ad campaign claims special interests—the state’s auto dealers—are pushing the legislation at the expense of taxpayers.
Lawmakers objected to that language and said they were trying to protect dealers who were forced to close from being replaced by other dealers because of favoritism.
“They must be spending taxpayer dollars on Botox to say that with a straight face,” said Sen. Shawn Mitchell, R-Broomfield.
Senate Majority Leader John Morse, D-Colorado Springs, objected to GM using some of its taxpayer-supported budget to pay for the ads.
As part of its restructuring, GM told about 2,000 dealers nationwide last year that it planned to revoke their franchise agreements this October. Chrysler ended franchise agreements with 789 dealers last summer.
Congress passed a bill allowing dealers to appeal to arbitrators.
GM spokesman Greg Martin said the proposed bill bypasses that arbitration process and the company had a right to defend itself against legislation he said could cost taxpayers millions of dollars.
Mitchell said car dealers aren’t honoring the arbitration process, citing the experience of a Longmont Jeep dealer whose franchise was given to another dealer even though he had filed for arbitration.
The dealer, Yale King, said Chrysler gave his successful Jeep business to another dealer three miles down the road on Feb. 8 after he and Chrysler had picked an arbitrator. He thinks it’s because he sold Jeeps along with GM cars while the other dealer only sold Chrysler vehicles.
Chrysler spokeswoman Kathy Graham said she couldn’t speak about the specifics of any decisions made regarding dealers. But she said the company has been moving toward dealerships that sell all the company’s brands under one roof. She also said the company would abide by the results of the arbitration proceedings.
