updated 9/30/2009 7:50:37 PM ET 2009-09-30T23:50:37

General Motors and Chrysler met Wednesday on Capitol Hill with dealers and lawmakers as talks began on the companies' plans to close around 3,000 dealerships as part of the automakers' restructuring following bankruptcy.

The first face-to-face meetings between dealers and the companies on the issue come as Congress weighs legislation that could force GM and Chrysler to reverse their closure decisions despite their argument that the cuts are needed to save costs.

The discussions also occurred on the same day that GM said it will wind down the Saturn brand after Penske Automotive Group Inc. backed out of talks to buy Saturn. As of May, there were 371 Saturn dealerships, according to the National Automobile Dealers Association, or NADA.

After the meeting on Capitol Hill, lawmakers said the dealers and automakers had agreed to seek a solution on their own, but stressed that Congress could still get involved if the two can't resolve their differences.

"We prefer a negotiated solution, but if negotiations don't bear fruit, we are going to proceed on a legislative track," said Chris Van Hollen, D-Md., a sponsor of a House bill that would force GM and Chrysler to reverse their closure decisions.

The meeting, hosted by House Majority Leader Steny Hoyer, D-Md., was followed by separate talks between the automakers and groups like NADA. Obama administration representatives also attended, but only as observers.

"It was a good discussion today," said John Bozzella, Chrysler's vice president for external affairs and public policy, adding that the talks with dealers will continue.

GM and Chrysler say the cuts are needed to reduce costs and better align their dealership base with lower consumer demand for new vehicles. The automakers have the backing of the administration, which shepherded them through Chapter 11 bankruptcy this year and said that cutting dealers was a needed step to help them reorganize.

Dealer groups argue the closings could lead to thousands of job cuts at a time when unemployment is at its highest level in decades. They also accuse the automakers of cutting some dealerships that were performing relatively well. The House has passed legislation that would force GM and Chrysler to restore the closed car lots. The Senate has yet to take up the legislation.

Dealers are pushing the automakers for a number of concessions, including agreeing to allow profitable dealerships to remain open and for greater payments to those that are closed.

In return, dealers are willing to concede some closures, said Jack Fitzgerald, owner of a Washington area chain of dealerships who has been involved in the effort to overturn the GM and Chrysler decisions.

"We are prepared to compromise," Fitzgerald said Tuesday.

GM says it based its decisions on sales performance, profitability, customer satisfaction and whether the dealers sold brands that the company plans to phase out, like Pontiac. The company insists it already has made concessions, like allowing dealers more time to file appeals. And it has offered about $600 million in financial assistance to dealerships that will close.

In a statement, GM said it appreciated the efforts of lawmakers to reach a "non-legislative solution" of its dealership closure plan. Chrysler could not immediately be reached for comment Wednesday.

GM is cutting 2,400 dealerships from its 6,000-dealer network by the fall of 2010 by not renewing franchise agreements and winding down stores with outgoing brands. Chrysler slashed 789 dealers as part of its bankruptcy proceedings this summer, leaving it with about 2,400.

GM says it based its decisions on sales performance, profitability, customer satisfaction and whether the dealers sold brands that the company plans to phase out, like Pontiac. The company insists it already has made concessions, like allowing dealers more time to file appeals. And it has offered about $600 million in financial assistance to dealerships that will close.

In a statement, GM said it appreciated the efforts of lawmakers to reach a "non-legislative solution" of its dealership closure plan.

The inspector general for the federal government's $700 billion fund to aid ailing banks and companies said last week that he will review the Chrysler and GM dealership closure decisions. The two companies have received about $60 billion in government help.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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