NADA's Tonkin Says Federal Report Shows Dealer Terminations ‘Unjustified'
DETROIT - An audit report by federal inspectors that was critical of how the Obama administration, General Motors and Chrysler handled the termination of thousands of dealerships proves that the cuts were “unjustified,” the chairman of the National Automobile Dealers Association says.
“The result of this report validates what NADA said all along -- that these terminations were unjust, they were uncalled for,” NADA Chairman Ed Tonkin told the Automotive Press Association here today. Dealers do not cost the manufacturers money, and the cuts were “done in haste and in error,” Tonkin said. “The auto task force got it wrong. The administration got it wrong.”
The July audit report triggered an investigation by the Office of the Special Inspector General for the Troubled Asset Relief Program. The office is now looking into whether any illegal activity took place when GM and Chrysler terminated those dealerships.
In late 2008, Congress gave TARP $700 billion to bail out U.S. banks and companies, including GM and Chrysler. GM has eliminated about 1,550 dealerships and Chrysler about 760 since their bankruptcies in 2009.
Tonkin said he does not know what is going on with the investigation or when it will be completed. But he said NADA met with auditors at the dealer group's headquarters in McLean, Va., and answered questions about methodology discussed in the association's meetings with the Obama auto task force.
This week, Rep. Steven LaTourette, R-Ohio, called on the administration to ask GM to suspend the 500 dealership terminations scheduled for Oct. 31, until the investigation is complete.
Tonkin said he hopes the investigation wraps up soon enough to help dealers whose stores face closure.
Said Tonkin: “As much as we can do to help those dealers, we're all for it."
More Industry

Kia Closes Out Summer With a Bang
Its U.S. subsidiary broke multiple records in August, in part due to a surge of demand for hybrids models.
Read More →
Indiana Dealership Changes Hands
A 30-year-old Ford dealership in Indiana has a new owner and will soon be undergoing renovations to meet manufacturer requirements.
Read More →
Texas Dealership No Longer in the Family
The Ford store, a longtime cornerstone of the Houston market, is now part of one of the fastest-growing U.S. auto groups.
Read More →
Genesis Grows California Presence
The Cardinale Automotive Group opened its third Genesis rooftop in the Golden State, Genesis of San Bruno, a stand-alone dealership serving the San Francisco Bay Area.
Read More →
August Auto Sales a Mixed Bag
An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.
Read More →
EV Market Humming Along
July sales show steady growth as the segment stabilizes from last year’s artificial surge following pullback of federal support.
Read More →
Auto Loan Delinquency Rates Stabilize
Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.
Read More →
EV Sales Recover in Q2
The EV sales roller coaster continues as numbers show improvement, but industry experts predict a year-over-year third-quarter decline and fourth-quarter jump.
Read More →
The Cheapest Hybrids to Fuel
The powertrain is increasing in popularity, in no small part due to its fuel economy. A new report lists the most efficient hybrids on the market.
Read More →
Hybrids and SUVs Gaining Ground
The most recent Kelley Blue Book Brand Watch found that only two nonluxury brands increased in shopper consideration, buoyed by their hybrid and SUV offerings.
Read More →