Car Dealers Shutting Down Everywhere--Can We Really Survive This One?
Posted: Friday, May 15, 2009
by Steve Kovacs
The Kovacs Perspective
A few days ago Chrysler canceled 789 dealership contracts nationwide as part of its reorganization plans in bankruptcy court. That's bad enough. Now General Motors is notifying 1,100 dealerships across the country that they won't renew their franchise agreements when they expire at the end of September 2010. Wow!
Of course, the bad news is the huge loss of direct jobs but also the major trickle down loss of jobs and local tax dollars, which will go hand-in-hand. This will be devastating across the country. The good news regarding Chrysler is that a federal court can still override their plan, which means it's not carved in stone yet.
The theory behind the closings is that having fewer, more profitable, dealerships is better than having thousands of smaller less profitable dealerships. Okay, maybe that makes sense, maybe it doesn't, but if so, at what cost? Can our country absorb this now with so many other areas of our economy under so much strain? Sure, we will survive, America always will, I have faith in that, but is now . . . the time this must be done?
I wish I had a solution, I do not-it is not my area of expertise. However, there have to be people out there who have valid ideas and solutions to minimize these seemingly drastic steps. When I teach my criminal justice classes, I frequently tell my students to offer their opinions and find solutions to problems instead of relying on others or me. It is amazing how often they solve or offer outstanding advice on major issues.
Now we are facing a major problem that I believe is going to be a mess for our economy. So is there anyone out there with some great ideas? I believe there is. I hope they stand up and make a difference soon.
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Top-level comments on this article: (5 total)Having less avenues to sell their products makes no sense to me. The automakers don't own the franchises, right? So basically they are saying they want to stop letting someone sell their products. I don't understand the reasoning, to be honest. I would get it if the automakers owned the land and buildings and wanted to consolidate by getting rid of real estate to raise cash, but if the franchisees own the property, what is the risk to the automakers? I must be missing something. Nice article.
Oops, I hit the wrong button on the rating, Steve. Should have been a '5'.Sorry about that!Good point—certainly seems that’s what is happening--less avenues to sell their products—I too must be missing something—thanks for writing, I appreciate it.
As someone who grew up during the great depression and has lived through 10 recessions and survived, this upcoming recession does not feel like a recession to me, but more like the beginning of another depression. Sound gloomy and I do not mean to be. However, with all the violence in the war it scares the heck out of me to think of society's retaliation to all this and it starts to bottom out and today's version of "bread lines" start to appear. The $250.00 payoff of this term's administration that is to come to each adult this month just may be enough to stem off "what"???"Tread the Earth Lightly"" and let your days be filled with... Peace, light and love,Arlene Wright-Correll
Hi Arlene--thanks for writing--I hope it gets better--I think it will, sooner than most are predicting but I think this auto problem has to be addressed differently--Boy, I hope we don't get to the point of bread lines etc--I hope I'm right and we get out of this mess--thanks again for writing.
Unfortunately, auto dealers can do what they wish as long as they are abiding by the law. That is the headache of living in a free country is that businesses have the right to screw people over for greedy purposes such as not dealing with the smaller companies. But fortunately because we live in a free society we can screw them over by not buying their product, at least until they do the right things. My view is that car dealers sell their jalopies at the price of small houses and after a few years they are worth less than bicycles. At least small houses increase in value and can last longer than the owner.My name is actually Michael S. GarvinHow true that some regularly produced automobiles are the price of some small homes and the minute you drive em out of the lot they lose a nice chunk of value. You may have hit on the solution…bicycles—I’m going out and buying one. Come to think of it, maybe not. With my luck I’ll be run over by…you guessed it, an automobile! Thanks for writing Mike.
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