Ky. auto dealers to receive franchise protections

FRANKFORT, Ky. (AP) - Automobile dealers won a major battle in
Kentucky on Friday with passage of a bill that would give them
leverage over carmakers in the scramble for franchises.
General Motors, which builds its signature Corvette sports car
in Kentucky, is calling for Gov. Steve Beshear to intervene.
"When you consider how much of Kentucky's economy is tied to a
strong auto industry and a successful GM, this bill sends the wrong
message," said GM spokesman Greg Martin. "Its passage could
discourage further investment in the state, and we're going to ask
the governor to veto it."
The House voted 92-0 on Friday to pass the bill that gives car
dealers who lost franchises first crack at new ones. The Senate
approved it 37-1 on Tuesday. Beshear hasn't said if he will veto
the measure.
"The governor will thoroughly review the bill before making a
decision," said Beshear spokeswoman Kerri Richardson.
Lawmakers in Georgia, Missouri, North Carolina and Ohio also are
considering legislation intended to improve the lot of car dealers
who have lost franchises.
Kentucky state Rep. Jimmie Lee, D-Elizabethtown, a former
automobile dealer, said he crafted the legislation because he felt
car dealers were being treated unfairly. If signed into law, the
measure would require carmakers to give affected auto dealers first
dibs on new franchises for 10 years.
"If a veto were to occur, I would urge the General Assembly to
override it," Lee said. And House Speaker Greg Stumbo,
D-Presonsburg, said he believes the bill has enough support among
lawmakers that "the likelihood of an override is pretty good."
Martin said the proposal would essentially block GM from
replacing unprofitable dealerships.
GM told 2,000 dealers nationwide it planned to revoke their
franchise agreements in October, and Chrysler cut off 789 dealers
because of lower demand for cars and truck. Dealers complained that
some of the sales lots targeted are still profitable and that the
automaker hasn't offered enough details about how it's choosing
which businesses to shutter.
Earlier this month, GM announced that about 600 dealerships out
of 1,100 that sought federal arbitration would receive letters
giving them that option.
GM had lobbied hard against the Kentucky legislation and had
conducted a public relations offensive with a statewide advertising
campaign.
"We're disappointed," Martin said. "And we'll ask the
governor not to place the special interests of the few above the
broader economic growth of Kentucky."
Martin said the measure affects only a handful of car
dealerships in Kentucky.
He said GM originally notified 38 car dealers that their
franchises were being canceled. Of that number, 25 contested the
decision and sought federal arbitration. Of those, 13 have received
letters of intent to reinstate the franchises from GM.
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The legislation is House Bill 217.

(Copyright 2010 by The Associated Press. All Rights Reserved.)


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