US Treasury to Audit Dealership Closures

The lack of progress in reaching an agreement between the two former bankrupt American manufacturers, GM and Chrysler, and the dealerships they chose to terminate has not only caused the House to request, once again, that dealer resurrection laws to be adopted, but also made the US Treasury decide to investigate the closures.

The audit will take place at about the same time as the manufacturers, the dealers and the auto task force begin talks to find middle ground. The audit will examine, according to Neil Barofsky, special inspector general for Treasury's $700 billion Troubled Asset Relief Program, "the process used by General Motors and Chrysler to identify which automotive dealerships should be maintained or terminated.”

The audit is necessary, Autonews reports, because dealers have complained the termination process was arbitrary and resulted in the closure of profitable businesses. Both GM and Chrysler deny such allegations, saying the terminations were done to ensure the automakers' post-bankruptcy survival.

Neil Barofsky was unable to say how long the audit will take, or whether the Treasury's findings will be brought to the attention of the involved parties. However, he said the body will also audit "governance issues when the U.S. government has obtained a large ownership interest in a particular institution” and "the extent of government involvement in management” of the two manufacturer's.

In the wake of their bankruptcies, Chrysler announced the termination of 789 dealerships, while GM raised the stakes even higher and announced 1,350 closures.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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