Car Dealers on Obama’s Chopping Block

Wednesday, John, one of the regulars in the chat room, said that he heard Chrysler was about to cut 700 dealers.  He wanted to know if anyone in the room had heard the same.  As no one had, I decided to do a bit of digging.  Well, John, if you are reading this you are not going to like the answer.

Chrysler has about 3,200 dealers and Obama’s car czar is “leaning” on Chrysler to trim those numbers rapidly.  Approximately 50% of those 3,200 dealers account for 90% of all Chrysler sales.  So, I suppose it safe to say that 1,600 dealerships will remain in business.  And, it is anyone’s guess what will happen to the other 1,600.  But, I wouldn’t want to be one of them right now, nor would I want to be employed by one of them right now.

The same article also spoke about the fate of GM’s dealers.  GM’s plan, announced in February, was to cut 1600 of its 6200 dealers at the rate of 400 per year through 2012.  The administration wasn’t happy with that either.  So it now insists that GM cut 2,600 of its dealers within 18 months.  According to the National Automobile Dealers Association,

Speeding up that process will only dump 180,000 more workers onto unemployment rolls in a recession…

The strange part is that the dealers cost the manufacturers nothing.  They are, for the most part, small businessmen who simply sell Chrysler’s and GM’s cars and send Chrysler and GM money for every sale.  So, why Obama wants to shut their doors, driving many dealers into bankruptcy, and more workers onto the unemployment rolls, will, no doubt, forever remain a mystery.

I suppose, an even deeper question is how can the government, who is merely an unsecured creditor of Chrysler and GM, dictate things such as this?  Perhaps the book Obama received from Cesar Chavez was titled “Government By Intimidation”.  If so, Obama has learned well.