Dealers: Bankruptcy Shouldn't Be An Option For GM

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The National Auto Dealers Association meets with a White House task force Thursday in hopes of staving off a General Motors bankruptcy. But there are increasing signs that the company may end up in court anyway.


Car dealers can only dream of such profits these days. A group of auto dealers will be at the White House today, trying to convince the president's Auto Task Force to keep GM out of bankruptcy. It may be an uphill battle, as NPR's Frank Langfitt reports.

FRANK LANGFITT: Among the big losers in a GM bankruptcy would be some of the company's more than 6,000 dealerships. John McEleney chairs the National Dealers Association. He expects 900 GM dealers will go under this year. And that's without a bankruptcy. McEleney says a court filing would send hundreds more over the edge.

Mr. JOHN MCELENEY (National Dealers Association): We have many dealers that are hanging by a thread. I think it would drive a large of number of dealers out of business more quickly.

LANGFITT: But persuading the White House won't be easy. The Auto Task Force appears to be leaning towards bankruptcy as a quick way to cleanse GM of crippling debt and health care costs. Even the company has called the court filing, quote "probable." But McEleney worries GM will become mired in a long court battle and collapse.

Mr. MCELENEY: Once they file bankruptcy, it will be a self fulfilling prophecy. I think Chapter 11 will go to Chapter 7, because even as low as demand is today, it will drop even another 20 or 30 percent.

LANGFITT: Chapter 11 is reorganization under the bankruptcy code. Chapter 7 is liquidation. The government doesn't want to sell off GM for parts, and it's backing warranties of new GM cars to bolster confidence in the company.

Frank Langfitt, NPR News, Washington.

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