Chrysler dealers shut down by Obama are mostly Republican
- Thread starter fossten
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luxuryrules
Dedicated LVC Member
Cool! I got to read about Chrysler, then a link about GMAC? Might want to have a look at your second link and correct it.
I see two underlying themes in that article. First is this quote:
"It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers," Bellavia said. "It really wasn't Chrysler's decision. They are under enormous pressure from the President's automotive task force."
which pretty firmly establishes that yes, the Fed did pressure Chrysler into closing dealers; but fails to demonstrate that the Fed had a hand in which dealers to close.
That connection is made by the lists of campaign contributions outlining what the various dealers sent to whom. Yet nobody (in the links provided, anyways) actually said "the automotive task force recommended we close these dealers." Even if that did happen, it's a function of business... if you're a politician wanting to remain in office and some businesses close, would you rather see the guys go under who gave you $50k or gave your opponent $50k? I can't blame them for thinking with their wallets - and I would fully expect the Party of No to have done the same thing had it been their decision.
Then again, I'm not entirely convinced it even matters because I'm not so sure they will be able to avoid closing all their dealers... Chrysler doesn't appear able to remain solvent.
I see two underlying themes in that article. First is this quote:
"It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers," Bellavia said. "It really wasn't Chrysler's decision. They are under enormous pressure from the President's automotive task force."
which pretty firmly establishes that yes, the Fed did pressure Chrysler into closing dealers; but fails to demonstrate that the Fed had a hand in which dealers to close.
That connection is made by the lists of campaign contributions outlining what the various dealers sent to whom. Yet nobody (in the links provided, anyways) actually said "the automotive task force recommended we close these dealers." Even if that did happen, it's a function of business... if you're a politician wanting to remain in office and some businesses close, would you rather see the guys go under who gave you $50k or gave your opponent $50k? I can't blame them for thinking with their wallets - and I would fully expect the Party of No to have done the same thing had it been their decision.
Then again, I'm not entirely convinced it even matters because I'm not so sure they will be able to avoid closing all their dealers... Chrysler doesn't appear able to remain solvent.
MonsterMark
Dedicated LVC Member
Can't wait for the chickens to come home to roost on your front door-step. That will be fun to watch you piss and moan.
luxuryrules
Dedicated LVC Member
I won't piss and moan. I'll do something productive about it.
What do you think I would do? Go onto the politics section of my favorite car forum and post a bunch of articles trying to bait people into disagreeing with me so I can insult them and 'win' the argument that ensues?
Oh, wait....
It should, at the very least send up a red flag. It is foolish to be dismissive of it.
Weather you realize it or not, you are effectively attempting to move the goalposts here.
One of the links specifically states that, "They [Chrysler] are under enormous pressure from the President’s automotive task force." While there may be no direct hand in closing these dealers, that doesn't mean that there wasn't pressure from the president to do this. You seem to be claiming that if there is not "direct" hand by the Prez in closing these dealers, then nothing is there. That is absurd. The Prez can apply indirect pressure to get his way. He has in the past.
So...because they have a financial incentive to abuse their power, it is OK to abuse their power? This looks like a bad attempt to rationalize corruption.
The info provided is more then enough to send up a red flag and demand a more through investigation; especially considering the history of the Obama administration, which one of the links points out at the end of it's blog with this line:
I don’t know. To believe this is true, you’d have to believe Obama applied some awfully heavy-handed pressure to get his way. And really, what are the odds of that?
FYI; the line is satire as the links provided are meant to establish a history of Obama using heavy-handed tactics to "get his way".No, you did come into the politics section of your favorite car forum and rudely condescended to the articles and/or ideas posted and (effectively) to the people who posted them.
Make no mistake, there is no chance to even have an intellectual debate (let alone win one) with someone who is being condescending, derisive and refusing to give the idea any consideration. As soon as you start treating an idea with condescension you have made the debate personal, at which point the intellectual portion of the debate is over.
fossten
Dedicated LVC Member
You obviously don't remember the Democrats from 1994-2006.
MonsterMark
Dedicated LVC Member
Exactly my point.You obviously don't remember the Democrats from 1994-2006.
Selective memory drives me crazy.
And YES, I want the portion of my party that represents me to say NO at every opportunity to the socialist usurper and the hate-mongerers he represents.
luxuryrules
Dedicated LVC Member
What's the weather got to do with anything? It's a little cool and humid up here, rain a little bit later today, but otherwise I should be good for a nice weekend.
I'm not saying he didn't apply pressure to close dealers, there's just nothing to show that he instructed them which dealers to close. Reading the thread, I'm not sure I made that clear. That is the distinction I'm after. Now, that's not to say that is not, in fact, what happened, I just want to see more evidence of it - I think you guys may be jumping to conclusions on insufficient data. However, if you really are convinced, without a doubt, that the Obama team told Chrysler "you must close these dealers" then I think it is fair I ask for a link with some evidence, would you agree?
Condescension and intellectual debate - it seems that whenever I disagree with you guys, it means I am being condescending. And I've come to the startling realization in the tax thread that, even when I agree with you guys, you still argue with me. Let's be real clear here man, you all aren't here for honest debate because anything that doesn't come from inside your own ultra-conservative world is automatically dismissed as lies, twisting the facts, fallacy, etc. It's really a shame because I agree with most of the way you guys think, but your complete failure to be inclusive and respectful of other people and ideas is indicitive of why our party suffered a pretty massive failure six months ago. Keep down the road you're going, alienate your potential voters and alienate folks from inside your party, and see 2010 become a repeat of 2008. Think it's bad now? Wait until it's a one party system and you're not in that party... and yes, that idea scares me just as much as it does you, which is why I want to see us succeed in 2010, I just don't see it happening if things don't start to change.
No one is saying that the Government is telling Chrysler which specific dealers to close; Chrysler is left to make the ultimate determination there. But the info does indicate that the Government might be pressuring them to close dealers due to political reasons of some sort; basically giving some sort of criteria. That is an abuse of power by the government, and the burden of proof on that, at this point in the debate is real low. It is more then enough to warrant further investigation, usually through an watchdog media. However, the MSM is more a lapdog for Obama and the Dems then any type of watchdog.
No, it is your attitude that is reflected in the way you word your posts, what you say, etc that shows you to be condescension. Whether or not you agree with us (in part or in whole) or disagree with us, it is still rude. It has nothing to do with the substance of what you say, but your approach in saying it. If you start condescending, especially when the substance of your argument shows an ignorance in what you are talking about, people are naturally going to get offended and insulted. To expect them to then treat you with a respect that you did not show them is a lot to ask.
Actually, that would be preferred, but there are two many people that here that come in with an adversarial tone, are initially rude, condescending,dishonest, etc. You cannot counter that with anything but the same (minus the dishonesty), or the more aggressive are allowed to set the rules of the debate, mischaracterize, misdirect, successfully smear, etc.
Ahh, we lost because we were ultimately trying to play nice and adjusting our positions and sacrificing our values accordingly. When you play nice with someone who isn't willing to, you only ever get run over.
The Dems try and use anything for political gain. Look at how they have made a power grab from the economic crisis. Look at the Paul Wellstone memorial service/campaign rally. Look at how they distort and smear conservatives. Look at how they destroyed Clarance Thomas, and Sam Alito. Look at how they attacked Joe the Plumber and Sarah Palin. Look at how they are setting up the debate over Sotomayor so that it seems any criticism of her is racist. You cannot counter that with deference and kindness and expect to win. You have to be just a ruthless as they are to have any chance to compete. The only exception is that you stay honest when they are dishonest. However that can, in some ways, tie your hands behind your back. So you have to make up for that by being more direct. Also consider the dominance of liberalism in the MSM, pop culture, academia, etc.
If you are going to let your arguments and positions, in any way, be dictated by whether or not these people think you are being "nice", you have already lost. Leftists have shown a pattern of being willing to abuse that to dictate your positions and cause you to sacrifice your principles.
Marcus
Dedicated LVC Member
In the zeal for finding new and unusual conspiracy theories to promote, someone "forgot" to mention that the huge majority of car dealers voted Republican. Therefore if the majority of dealers contributed to Republicans, then it goes to follow that a random subset of those dealers (those which are being closed) will also contain a larger portion of Republicans.
http://www.fivethirtyeight.com/2009/05/news-flash-car-dealers-are-republicans.html
http://www.fivethirtyeight.com/2009/05/news-flash-car-dealers-are-republicans.html
fossten
Dedicated LVC Member
Really? You really want to play spell Nazi? Really?
fossten
Dedicated LVC Member
So compare the percentage of GOP dealers torpedoed vs. the percentage of Dem dealers torpedoed.
And it's still wrong and unconstitutional for Chrysler to do this, period.
http://www.youtube.com/watch?v=oZHfE-lsx_0&feature
luxuryrules
Dedicated LVC Member
Really? You really want to play spell Nazi? Really?
Nope. I was just adding a bit of levity.
Learn not to take life so seriously, you'll never get out alive
Good point. But, that still doesn't fully explain things at this point, and even if it turns out that is the reason for the large number of dealerships being closed, it still has some political (and questionable abuse of power) implications, as the article in my next post points out (I highlighted it, in the last update section). So far, there has only been one dealer closed that was found to contributed to Obama, as this link points out. It also points out some other interesting things, like the fact that Chrysler is closing Jim Anderer, who's dealership is in the top 2 percent of all dealers when it comes to sales volume, has been closed, but lesser dealerships have been closed. Then there is the issue of the RLJ-McLarty-Landers dealerships.
Here is another link to this story, with the lists of deals who have been closed and who will remain open.
Furor grows over partisan car dealer closings
By: Mark Tapscott
Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.
The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?
Florida Rep. Vern Buchanan learned from a House colleague that his Venice, Florida, dealership is on the hit list. Buchanan also has a Nissan franchise paired with the Chrysler facility in Venice.
"It's an outrage. It's not about me. I'm going to be fine," said Buchanan, the dealership's majority owner. "You're talking over 100,000 jobs. We're supposed to be in the business of creating jobs, not killing jobs," Buchanan told News 10, a local Florida television station.
Buchanan, who succeeded former Rep. Katharine Harris in 2006, reportedly learned of his dealership's termination from Rep.Candace Miller, R-MI. Buchanan owns a total of 23 dealerships in Florida and North Carolina.
Also fueling the controversy is the fact the RLJ-McCarty-Landers chain of Arkansas and Missouri dealerships aren't being closed, but many of their local competitors are being eliminated. Go here for a detailed look at this situation. McClarty is the former Clinton senior aide. The "J" is Robert Johnson, founder of the Black Entertainment Television, a heavy Democratic contributor.
A lawyer representing a group of Chrysler dealers who are on the hit list deposed senior Chrysler executives and later told Reuters that he believes the closings have been forced on the company by the White House.
"It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers. It really wasn't Chrysler's decision. They are under enormous pressure from the President's automotive task force," said attorney Leonard Bellavia.
RedState.com's Josh Painter has a useful roundup of what has been found so far by a growing number of bloggers digging into what could be a very big story indeed. Also, see my column on this issue and how it fits into the larger context dubbed by the Examiner's Michael Barone as "gangster government."
As part of Chrysler's bankruptcy agreement with the White House, the company plans to close roughly a quarter of its 3,200 dealerships. Lists of the dealerships being cut and those retaining their Chrysler franchises can be found here in pdf format. Many dealers contend the criteria being used to determine which dealerships survive is not clear and that many of those that are being closed in fact are profitable businesses, despite the current recession.
**UPDATE: Auto Prophet says wait just a minute**
The Auto Prophet - an anonymous engineer working for one of the Detroit automakers - is skeptical of the suggestion that political considerations are playing a role in White House car czar decisions on which Chrysler dealers are to be shuttered.
A more likely explanation is simply the fact that more Chrysler dealers in general are likely to be Republican contributors, which would mean more of the closed dealers would be seen to be GOP supporters than Democrat supporters: "My hypothesis is that Chrysler dealers, being small businessmen, are more likely to donate to Republicans than Democrats, for predictable reasons. Like any small businessmen, car dealers want lower taxes, a lower minimum wage, fewer regulations, etc."
I have been reading The Auto Prophet for years and consider him to be among the most credible of bloggers on automotive issues. On this issue, I agree with him to the extent that a definitive, statistical analysis-driven conclusion is not possible until all contributions by all Chrysler dealers is completed.
But two points should be noted here. First, even if we accept the proposition that most car dealers are more likely to be Republican than Democratic donors, there would still be a "disparate impact" from closings on one class of dealers, compared to the other. When the federal courts see a disparate impact on racial groups, the policy or action in question is typically held to be inappropriate.
Race and car dealer closings, of course, aren't analogous. But the lesson remains that when government makes economic decisions that ought to be left to the private market, it is impossible to avoid disparate impacts. And there is always the question of would the Obama White House be so quick to close hundreds of dealerships if the owners of those dealerships were predominantly Democratic donors?
Second, since neither Chrysler, nor the White House have made public the criteria used to select dealers for elimination - and because a significant number of those being closed were profitable - the only way to resolve the inevitable controversy about political considerations in political decisions is to make the criteria public and allow independent outside observers to assess how those criteria were applied.
I'm not holding my breath on the likelihood of that happening any time soon.
**UPDATE II: White House car czar married to Democratic fund raiser**
Maybe it's significant, maybe not, but a colleague here in the Examiner newsroom just reminded me that White House car czar Steven Rattner is married to Maureen White, the former national finance chairman of the Democratic National Committee. And let's not forget that before Rattner became a Wall Street mover and shaker, he was a New York Times reporter. Check out the Wiki bio here.
**UPDATE III: And if most Chrysler dealers are Republicans, what then?**
Excellent post up by Nate Silver on Huffpo making the argument that nobody should be surprised that lots of the Chrysler dealers getting the axe are GOP contributors because car dealers as a group are overwhelmingly Republican. Says Silver:
"It shouldn't be any surprise, by the way, that car dealers tend to vote -- and donate -- Republican. They are usually male, they are usually older (you don't own an auto dealership in your 20s), and they have obvious reasons to be pro-business, pro-tax cut, anti-green energy and anti-labor. Car dealerships need quite a bit of space and will tend to be located in suburban or rural areas. I can't think of too many other occupations that are more natural fits for the Republican Party. Unfortunately, while we are still a nation of drivers, we are not a nation of dealers."
That's true, of course, but I'm not sure that it ends the discussion. In fact, it may even make the discussion of possible partisan considerations behind the closings even more relevant. Think of it this way: If 88 percent of all car dealers were Democratic contributors, rather than GOPers, how likely is it that the Obama folks would be delivering such an egregious economic blow to the group, a blow that put thousands of people out of work and deprives hundreds of Democratic donors of their means of making contributions?
More likely, the Obama White House would be doing everything possible to avoid closing Chrysler dealerships, especially since the argument for closure has nothing to do with whether any particular dealership is profitable, but whether it is one more than somebody thinks Chrysler or GM should have in order to spread sales like Toyota does it.
If you think I am kidding, let's do a quick review of recent automotive industry history. People in Detroit, the automotive media - and on Wall Street where White House car czar Steve Rattner made his fortune - have been debating for years about the Big Three's need to reduce their dealership count in order to become more like Toyota.
Remember in the late 1970s when Chysler almost went bankrupt the first time? And did you know all that kept Ford afloat in 1980 was its foreign sales? But despite those jolts, Detroit still didn't resolve the issues presented by serious foreign competition.
Instead of directly confronting the main source of their problem - over-priced labor that put the Big Three at a major disadvantage on costs - Big Three executives tried other approaches to manage what was sometimes called the "over-capacity problem."
Too many dealerships was only a minor part of the over-capacity problem, which at its most fundamental level consisted of having too many factories making far more vehicles than consumers wanted to buy. The ideas was that if they cut back production capacity to match sales, everything would be fine.
That thinking obscured the fundamental problem - too few sales of vehicles that were too costly to build and that increasingly consumers rejected. Detroit has still not solved this problem, although GM got it half right in the last decade by revamping its product line and substantially upgrading its assembly and reliability scores. But GM still hasn't been able to penetrate the UAW's lock on production costs. Ditto Chrysler, which suffers the additional fact of a product line that is in most respects at best merely adequate.
The Japanese automaker's U.S. sales strategy has long focused on having fewer dealers selling more cars per dealership than any of the Big Three. The thinking is that each dealer will make more money and be financially stronger as a result. The traditional Detroit strategy before Toyota came on the scene was the opposite - the more opportunities potential customers have to buy our products, the more likey they are to buy it.
But Toyota's strategy would be worthless if its products weren't sought after by consumers. Dealer count is a secondary issue, product appeal is the key to sales, which are the key to manufacturer profitability.
The tale is told in the numbers, as usual. Check out this excellent analysis by Bloomberg's Katie Merx and Keith Naughton on the math behind the dealer closings. Here's the key passage:
"Average new-auto revenue was $14.3 million for GM dealers and $12.8 million for Chrysler last year, compared with $40.9 million for Toyota, based on data from auto-research company Edmunds.com. Dealers also make money on used vehicles, parts and service.
"Each GM store averaged 444 new-auto sales, while Chrysler had 405, according to consulting firm Grant Thornton. Ford Motor Co. was similar, at 483. Japan’s three biggest automakers dwarfed those totals, with 1,200 for Toyota, 1,150 for Honda and 764 for Nissan Motor Co., Grant Thornton found.
"Shrinking GM’s dealer ranks to about 3,600 would push the automaker’s retailers to an annual average of 750 sales, said Paul Melville, a Grant Thornton auto-retailing analyst in Southfield, Michigan.
"'It’s heading in the right direction, but it’s still only 65 percent of where Toyota is,' Melville said. 'They’ll still have a lot of low-volume stores.'"
So, closing dealerships isn't what will restore Chrysler or GM to profitability. Which raises an interesting question for the White House: If getting Chrysler and GM back to profitability is the goal, why force any dealership to close?
By: Mark Tapscott
Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.
The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?
Florida Rep. Vern Buchanan learned from a House colleague that his Venice, Florida, dealership is on the hit list. Buchanan also has a Nissan franchise paired with the Chrysler facility in Venice.
"It's an outrage. It's not about me. I'm going to be fine," said Buchanan, the dealership's majority owner. "You're talking over 100,000 jobs. We're supposed to be in the business of creating jobs, not killing jobs," Buchanan told News 10, a local Florida television station.
Buchanan, who succeeded former Rep. Katharine Harris in 2006, reportedly learned of his dealership's termination from Rep.Candace Miller, R-MI. Buchanan owns a total of 23 dealerships in Florida and North Carolina.
Also fueling the controversy is the fact the RLJ-McCarty-Landers chain of Arkansas and Missouri dealerships aren't being closed, but many of their local competitors are being eliminated. Go here for a detailed look at this situation. McClarty is the former Clinton senior aide. The "J" is Robert Johnson, founder of the Black Entertainment Television, a heavy Democratic contributor.
A lawyer representing a group of Chrysler dealers who are on the hit list deposed senior Chrysler executives and later told Reuters that he believes the closings have been forced on the company by the White House.
"It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers. It really wasn't Chrysler's decision. They are under enormous pressure from the President's automotive task force," said attorney Leonard Bellavia.
RedState.com's Josh Painter has a useful roundup of what has been found so far by a growing number of bloggers digging into what could be a very big story indeed. Also, see my column on this issue and how it fits into the larger context dubbed by the Examiner's Michael Barone as "gangster government."
As part of Chrysler's bankruptcy agreement with the White House, the company plans to close roughly a quarter of its 3,200 dealerships. Lists of the dealerships being cut and those retaining their Chrysler franchises can be found here in pdf format. Many dealers contend the criteria being used to determine which dealerships survive is not clear and that many of those that are being closed in fact are profitable businesses, despite the current recession.
**UPDATE: Auto Prophet says wait just a minute**
The Auto Prophet - an anonymous engineer working for one of the Detroit automakers - is skeptical of the suggestion that political considerations are playing a role in White House car czar decisions on which Chrysler dealers are to be shuttered.
A more likely explanation is simply the fact that more Chrysler dealers in general are likely to be Republican contributors, which would mean more of the closed dealers would be seen to be GOP supporters than Democrat supporters: "My hypothesis is that Chrysler dealers, being small businessmen, are more likely to donate to Republicans than Democrats, for predictable reasons. Like any small businessmen, car dealers want lower taxes, a lower minimum wage, fewer regulations, etc."
I have been reading The Auto Prophet for years and consider him to be among the most credible of bloggers on automotive issues. On this issue, I agree with him to the extent that a definitive, statistical analysis-driven conclusion is not possible until all contributions by all Chrysler dealers is completed.
But two points should be noted here. First, even if we accept the proposition that most car dealers are more likely to be Republican than Democratic donors, there would still be a "disparate impact" from closings on one class of dealers, compared to the other. When the federal courts see a disparate impact on racial groups, the policy or action in question is typically held to be inappropriate.
Race and car dealer closings, of course, aren't analogous. But the lesson remains that when government makes economic decisions that ought to be left to the private market, it is impossible to avoid disparate impacts. And there is always the question of would the Obama White House be so quick to close hundreds of dealerships if the owners of those dealerships were predominantly Democratic donors?
Second, since neither Chrysler, nor the White House have made public the criteria used to select dealers for elimination - and because a significant number of those being closed were profitable - the only way to resolve the inevitable controversy about political considerations in political decisions is to make the criteria public and allow independent outside observers to assess how those criteria were applied.
I'm not holding my breath on the likelihood of that happening any time soon.
**UPDATE II: White House car czar married to Democratic fund raiser**
Maybe it's significant, maybe not, but a colleague here in the Examiner newsroom just reminded me that White House car czar Steven Rattner is married to Maureen White, the former national finance chairman of the Democratic National Committee. And let's not forget that before Rattner became a Wall Street mover and shaker, he was a New York Times reporter. Check out the Wiki bio here.
**UPDATE III: And if most Chrysler dealers are Republicans, what then?**
Excellent post up by Nate Silver on Huffpo making the argument that nobody should be surprised that lots of the Chrysler dealers getting the axe are GOP contributors because car dealers as a group are overwhelmingly Republican. Says Silver:
"It shouldn't be any surprise, by the way, that car dealers tend to vote -- and donate -- Republican. They are usually male, they are usually older (you don't own an auto dealership in your 20s), and they have obvious reasons to be pro-business, pro-tax cut, anti-green energy and anti-labor. Car dealerships need quite a bit of space and will tend to be located in suburban or rural areas. I can't think of too many other occupations that are more natural fits for the Republican Party. Unfortunately, while we are still a nation of drivers, we are not a nation of dealers."
That's true, of course, but I'm not sure that it ends the discussion. In fact, it may even make the discussion of possible partisan considerations behind the closings even more relevant. Think of it this way: If 88 percent of all car dealers were Democratic contributors, rather than GOPers, how likely is it that the Obama folks would be delivering such an egregious economic blow to the group, a blow that put thousands of people out of work and deprives hundreds of Democratic donors of their means of making contributions?
More likely, the Obama White House would be doing everything possible to avoid closing Chrysler dealerships, especially since the argument for closure has nothing to do with whether any particular dealership is profitable, but whether it is one more than somebody thinks Chrysler or GM should have in order to spread sales like Toyota does it.
If you think I am kidding, let's do a quick review of recent automotive industry history. People in Detroit, the automotive media - and on Wall Street where White House car czar Steve Rattner made his fortune - have been debating for years about the Big Three's need to reduce their dealership count in order to become more like Toyota.
Remember in the late 1970s when Chysler almost went bankrupt the first time? And did you know all that kept Ford afloat in 1980 was its foreign sales? But despite those jolts, Detroit still didn't resolve the issues presented by serious foreign competition.
Instead of directly confronting the main source of their problem - over-priced labor that put the Big Three at a major disadvantage on costs - Big Three executives tried other approaches to manage what was sometimes called the "over-capacity problem."
Too many dealerships was only a minor part of the over-capacity problem, which at its most fundamental level consisted of having too many factories making far more vehicles than consumers wanted to buy. The ideas was that if they cut back production capacity to match sales, everything would be fine.
That thinking obscured the fundamental problem - too few sales of vehicles that were too costly to build and that increasingly consumers rejected. Detroit has still not solved this problem, although GM got it half right in the last decade by revamping its product line and substantially upgrading its assembly and reliability scores. But GM still hasn't been able to penetrate the UAW's lock on production costs. Ditto Chrysler, which suffers the additional fact of a product line that is in most respects at best merely adequate.
The Japanese automaker's U.S. sales strategy has long focused on having fewer dealers selling more cars per dealership than any of the Big Three. The thinking is that each dealer will make more money and be financially stronger as a result. The traditional Detroit strategy before Toyota came on the scene was the opposite - the more opportunities potential customers have to buy our products, the more likey they are to buy it.
But Toyota's strategy would be worthless if its products weren't sought after by consumers. Dealer count is a secondary issue, product appeal is the key to sales, which are the key to manufacturer profitability.
The tale is told in the numbers, as usual. Check out this excellent analysis by Bloomberg's Katie Merx and Keith Naughton on the math behind the dealer closings. Here's the key passage:
"Average new-auto revenue was $14.3 million for GM dealers and $12.8 million for Chrysler last year, compared with $40.9 million for Toyota, based on data from auto-research company Edmunds.com. Dealers also make money on used vehicles, parts and service.
"Each GM store averaged 444 new-auto sales, while Chrysler had 405, according to consulting firm Grant Thornton. Ford Motor Co. was similar, at 483. Japan’s three biggest automakers dwarfed those totals, with 1,200 for Toyota, 1,150 for Honda and 764 for Nissan Motor Co., Grant Thornton found.
"Shrinking GM’s dealer ranks to about 3,600 would push the automaker’s retailers to an annual average of 750 sales, said Paul Melville, a Grant Thornton auto-retailing analyst in Southfield, Michigan.
"'It’s heading in the right direction, but it’s still only 65 percent of where Toyota is,' Melville said. 'They’ll still have a lot of low-volume stores.'"
So, closing dealerships isn't what will restore Chrysler or GM to profitability. Which raises an interesting question for the White House: If getting Chrysler and GM back to profitability is the goal, why force any dealership to close?
PetesSweets86
Dedicated LVC Member
They should just cut Crysler and GM's Financial market (example: GMAC). That is what dragged them into the ground......they put their money in the wrong place and trusted ppl for a 300k loan that they'd ACTUALLY pay of.....
fossten
Dedicated LVC Member
Words of 'wisdom' from the unwise.Nope. I was just adding a bit of levity.
Learn not to take life so seriously, you'll never get out alive
Don't be such a nitpicker, else it will be done to you.
They did that already.
Chrysler finance was merged into GMAC.
And GMAC was just taken over by the federal government.
Car loans aren't what's sinking the industry.
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I'm not sure if it was over broad political views, but something shady definitely went down when they closed some of the dealerships. I remember specifically (Local news in PA) that Chrysler closed a dealership that was in the leading 2% for sales out of all of the dealerships. The manager seemed suspicious over the whole ordeal.