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( 10 comments — Leave a comment )
bistet
May. 28th, 2009 05:01 pm (UTC)
regardless of contributions
It's totally illegal? outrageous that this administration mandates closing of any dealerships AT ALL. The ONLY authority to do that here is the Bankruptcy Court.

readherring
May. 28th, 2009 05:35 pm (UTC)
Re: regardless of contributions
The administration didn't mandate any closings. The administration put a condition on their loan that Chrysler had to restructure so that it could become stable enough to pay it back. I don't think that's unreasonabe; especially since I don't want our government to own Chrysler's debt forever.

Chrysler made the decision to close dealerships. Financially, it was an easy decision to make, even if it was emotionally hard to do. The Chrysler auto dealership network grew at a time when there wasn't much foreign competition, and it never contracted when Japan came on the scene.
bxiie
May. 28th, 2009 05:39 pm (UTC)
Re: regardless of contributions
"Many dealers contend... that many of those that are being closed in fact are profitable businesses, despite the current recession."

Makes perfect sense.
readherring
May. 29th, 2009 02:14 am (UTC)
Re: regardless of contributions
Dealers receive special fees, bonuses, and rebates from car manufacturers that reduce costs and add to profit potential. Without manufacturers' assistance, many dealers wouldn't be able to make it.

When Chrysler dealerships are too close together, they compete with each other and drive down the price of the merchandise, lowering profits for all. So a dealership can be making money, but closing that dealership would allow the manufacturer to profit more.

Look, I don't have illusions about Obama being the golden messiah that would never do evil or wrong. I'm sure that on some level, he's trading favors with people just like other politicians do. But the man is smart, and he has been very careful. I doubt very much that he'd inject politics into the selection of plants to close, because that would be too damn obvious.
bistet
May. 28th, 2009 06:27 pm (UTC)
Re: regardless of contributions
If the gov't loaned $ to chrysler, then they are just another bondholder, and are now subject to the authority of the bankruptcy court, regardless of mandates conditions of the loan.

And aren't dealerships (private) franchises? Franchises pay money to the corporation, not the other way around. Chrysler's overhead to their franchises is national advertising, which they will pay even if they close a few dealerships. So I don't understand how closing franchises helps the corporation at all.
readherring
May. 29th, 2009 02:23 am (UTC)
Re: regardless of contributions
When I worked at Borders, they opened another Borders ten minutes down the road from us. Our business suffered because we were competing with ourselves. When this happens in the auto industry, this type of competition depresses the price of the vehicles, because there are only so many people in a city that want a PT Cruiser.

There is no hard, set price for what the dealer pays for the manufacturer. They receive special fees, bonuses, and rebates from the manufacturer that allow them to turn a profit on their zany "ONE DOLLAR OVER INVOICE!!" deals.

By having only one dealer in a region, Chrysler can sell about the same amount of cars that they do through multiple dealers, but because the competition is lowered, both the dealer and the manufacturer can afford to charge more.
readherring
May. 28th, 2009 05:29 pm (UTC)
This is not a terribly credible conspiracy theory.
I was about to make a comment after reading the first paragraph, but then I saw that someone beat me to it several paragraphs down:

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."

Also, I didn't see any evidence anywhere that showed the government, and not the Chrysler board of directors, picking which dealerships should be closed.
bxiie
May. 28th, 2009 05:38 pm (UTC)
Re: This is not a terribly credible conspiracy theory.
Yep, like I said in the subject, total coincidence. I'm sure there is a really good reason the criteria for closings hasn't been released. Also, after deposing Chrysler execs, Atty. Bellavia said...

"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."

But I did link to this article and not other ones in order to include the opposing viewpoint.
fr_defenestrato
May. 28th, 2009 08:02 pm (UTC)
Y'know, I can't claim to be anything but a dunderhead when it comes to economics, and I've had an enormously difficult time wrapping my head around the whole auto industry bailout dealie (vice the Wall Street bailout dealie, the S&L bailout of the 1980s, etc.)... I really don't know enough to discuss this stuff intelligently. And I do not think it far-fetched that Obama's administration would play politics in this or any given situation. I have to giggle at any implication that that would be anything new, in any way a change from Mr. Bush's administration, or solely the bailiwick of those durn thievin' Democrats.

I'm curious to hear speculation re what would have happened had Obama failed to act in any way to assist Detroit. Thought?

Once again, it's the comments that freak me right the fuck out:

  • The Obamanista's [sic]are executing a campaign of wealth destruction that is unrivaled by anything in history. The KGB and the Soviet Central Committee couldn't have thought this stuff up. Their miscalculation lies with under-estimating American entreprenurial spirit. But I guess in those cases, the Obama administration will nationalize those business ala' Hugo Chavez. Obama and his under-cover Marxist's are taking the American Way down the path to hell on a rocket sled.
  • Keep mining the geneaology of this President and his cabal: Russian Comintern directed artists and civil servants in place in spite of McCarthy-- Red-diaper babies--the Weathermen and anti-war protesters wartime cooperation with USSR and China as avowed communists-- Alinsky a veiled Communist-- the guilt of the well-educated-- establishment of ACORN by Alinsky-inspired Weathermen-- identity politics-- establishmentof SEIU by Alinsky-inspired former Weatherman-- Black liberation theology-- the ethos of Web 2.0 (it's all about change). the rise of a partisan Alinsky state-- use of SEIU/ACORN employees as Brown Shirts.
  • Hey Vern, No matter how many left wing liars they pay to refute this story, it cannot be refuted. The facts remain. Our country cannot wait until Nov 2010 to stop this coup.
  • The tyrant Obama and his Neo-Fascist cronies in the Occupied Democratic Party strike again. But you all wanted change, right? Well, you got it.


Seriously, WTF? Do these people even know what the word 'fascist' means? Government-industry collaboration is fascism, and the Bush administration was industry's best friend. I really have to say I'm scared shitless over the idea of a revolution of idiots protesting the wrong guy and the wrong ethos...
peregrin8
May. 28th, 2009 08:12 pm (UTC)
fang pi
Web 2.0 and Brownshirts in the same comment? There has to be a Firefly joke in there somewhere.
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