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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.

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Bjamexza Q. Pyndejo / James O. Payne, Jr.
Bxiie Q. Pyndejo

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