By Mark Huffman
ConsumerAffairs.com
May 14, 2009
The nation's car dealers have struggled against the big drop in auto
sales since last year, but their problems may be about to get worse.
Published reports say General Motors and Chrysler are about to shutter
a combined 3,000 car dealerships in the U.S.
Reuters quotes unnamed sources as saying GM plans to close as many as 2,000 dealers while Chrysler notified its dealers of plans to shut down 789 of its dealers. Those numbers amount to about a third of GMs and 25 percent of Chryslers dealers.
Car dealer lobbyists in Washington estimate those closings would cost as many as 200,000 jobs at dealerships across the U.S.
For the record, neither GM nor Chrysler has announced any plans regarding its dealers. Legal experts say terminating dealers could be a sticky matter, since they are independent businesses that enjoy the protection of state franchise laws.
The National Automobile Dealers Association has launched a counter offensive to marshal opinion against closing dealers. The group has created an ad campaign in the form of an open letter from NADA Chairman John McEleney to President Obama questioning why his auto task force is demanding drastic cuts in the number of U.S. dealers.
"Cutting dealers at this time would do absolutely nothing to make either GM or Chrysler more viable," the letter states. "The idea that dealer numbers should be rapidly and drastically reduced apparently comes from Wall Street."
"Mr. President, we urge you to choose Main Street over Wall Street," the association added.
Full-page print ads are scheduled to run in the Washington Post, Politico and Automotive News. NADA also organizing a dealer fly-in this week so dealers could meet with members of Congress. NADA officials are also scheduled to meet with the presidents auto task force today.
"It makes no sense for an automaker to radically cut its dealer network," says McEleney, a GM, Toyota and Hyundai dealer in Iowa. "Manufacturers need revenue, and the only way to get it is to sell more cars to dealers. In other words, dealers equal revenue for their manufacturers."
