|July 24, 2009|
|Stop Screwing Around with GM, Chrysler Bailout|
|By Kevin McCauley|
|Congress is playing into the hands of those opposed to the auto industry bailout, screwing around|
with survival plans put forward by General Motors and Chrysler.
Washington micro-management of "tough love" decisions is the last thing needed by GM and Chrysler's new leadership.
Congressional demands that GM and Chrysler trash plans to close thousands of auto dealerships across the country is the latest outrage. GM wants to shutter a third of its 6,000-member dealer network. Chrysler already has slashed 800 of its 3,200 dealers.
This blogger understands that auto dealers play a huge role in the civic life of small town America. They are part of the fabric of a community. Auto dealers support charities, fund sport teams, pay taxes, buy local ads and usually are a town’s biggest employer. They also make political donations to contribution-crazed Congressmen.
GM and Chrysler dealerships, however, were built up during a time when domestic auto makers owned the U.S. market. GM could support 6,000 dealers when it controlled half the U.S. auto business. That share is never coming back. The number of Chrysler dealers seems especially out of whack. The No. 3 Detroit car company had more than half as many dealers as GM, which is more than twice its size.
The jury remains out on whether either car company will ultimately survive. Survival will come only if GM and Chrysler dramatically downsize. Fewer dealers reflect the reality of Detroit’s sorry market position. If Congress fiddles with the dealer shutdown plan, GM and Chrysler will both burn. Taxpayer bailout money wasn't intended to subsidize the operation of "Red's Chevy."
What’s next? Will Congress decide styling of new models? How about the number of cupholders?
More bad news: word is that Congress wants to review plant closures, which opens an even bigger can of worms than dealer shutdowns. Why don't we just write an obit for a pair of American car companies?
Ford may become America's only car company -- thanks to a busy-body Congress.
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