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Your thoughts on the auto industry
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WTF - Bail out Wall Street and close Auto Dealerships
In great pain, I wrote my President today about the plan to shut down auto dealerships here in the States while allowing GM to sell autos made in China as their own, and his statement that the "few individuals" that have been identified as involved in publicly disclosed torture have "been dealt with" and there is no need for further investigation or public disclosure about America's use of torture. I have blind copied everyone in my address book on this email - even my business sources - because I am strongly inviting them to demand some accountability from Washington DC and the President.
First let me say that I am a registered Democrat. I voted for the Obama/Biden ticket, I contributed financially to this campaign and to the Democratic party at both the State and Federal levels, and I made phone call and knocked on doors for Obama. So it pains me greatly to say that I have lost faith in him. He is not keeping his campaign promises - nor his word during prior press releases - about the auto industry, federal transparency, and the issue of America using torture.
1) GM plans to import >17,000 cars to sell in the US from China by 2011, and >51,000 by 2014. In a press release on March 30th 2009 the President is quoted as saying"If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always." I don't know how he can make this statement while allowing (requiring?) small &/or franchise GM & Chrysler dealers to be closed. Many dealers fitting Chrysler's criteria for closing are rural, located far from urban colleagues to which their local populations would have access. With the high cost of everything, lower wages and high unemployment, I'm not sure the President and his Auto Industry Task Force have considered that a significant portion of the rural population will not be in a position to take advantage of his quoted guarantee of service and repair for Chrysler & GM vehicles when there is no dealership in their area.
The closing of 1000-1200 GM franchise dealers and 800 or more Chrysler dealers will leave a minimum of 28,000 out of work. If GM closes the dealerships quoted previously, these numbers will be even higher - up to 42%, or 2,940 dealerships (based on 7,000 total current dealer estimate in http://online.wsj.com/article/SB122688631448632421.html?mod=article-outset-box). Because they are no longer protected by their state's laws, closed dealerships will not be able to pay debts already on the books, which means their suppliers will not be paid either. As the suppliers go out of business, the costs associated with their unemployed will add to the financial burden, as will the costs incurred as the former employees are no longer able to pay bills or make house payments. In addition, almost 20% of a state's sales taxes typically come from auto dealerships.
Franchise dealerships do not directly cost auto companies anything. The cost of having more dealerships than a particular area needs is indirect. The cost of closing dealerships is direct. The market takes care of closing dealerships that do not offer reasonable prices or good service.We do not need a mandate for this - we need to allow the market to correct itself. All closing dealerships is going to do is reduce competition among dealers, leading to higher costs and lower repair standards due to the lack of competition.
- TAGS:
- bailout,
- chrysler,
- closing,
- auto_industry,
- auto_dealers,
- dealerships,
- gm
- GROUPS:
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