Bailout Watch 572: What Will It Take to Get You Out of a Dealership Today?

by Edward Niedermeyer

July 23rd, 2009 12:45 PM

bailout watch 572 what will it take to get you out of a dealership today

More testimony over the fate of GM and Chrysler’s culled dealers yesterday revealed possible compromises, although consensus is still elusive. Chrysler VP and Associate General Counsel Lou Ann Van Der Wiele told the House Judiciary Committee (via the NYT) to ignore the pleas of Chrysler’s 789 slashed dealers, explaining that dealer reinstatement would be the end of Chrysler as we’re getting to know it. “Legislation aimed at reversing some of the painful but necessary actions taken during Old Carco’s bankruptcy will simply take Chrysler back to the future that Old Carco faced not long ago—and this time, without the option of a purchaser for substantially all of its assets. Complete liquidation, with all of its dire consequences, could follow.” But then, “complete liquidation with all its dire consequences” could follow if The New Chrysler ate the wrong tuna sandwich.

Meanwhile, GM took advantage of ChryCo’s histrionics to make itself look good by comparison. The General revealed that will pay a grand total of $600 million to its wound-down dealers, reports the Detroit News. That breaks down to $1,000 per vehicle, plus eight months of rent assistance. Plus, GM is offering its culled dealers the right of first proposal for new dealership openings.

Not that the offer to return to the bosom of the company at some undefined future point has dealers jumping for joy. “I would not trust GM’s right of first proposal, or any other deal, because they have not dealt morally or ethically with us,” Tamara Darvish of the Committee to Restore Dealer Rights tells Automotive News [sub]. “This is a very narrow offer, just one element of the overall set of issues,” adds NADA spokesman David Hyatt. “It would be a much better approach for us to wait for a broader package.” Funny how nobody is questioning why more dealerships would be opening at all. But, hey, at least GM is trying . . . Chrysler isn’t even offering hypothetical restitution.

Comments

Join the conversation

2 of 19 comments

The Walking Eye on Jul 24, 2009
‘Bankruptcy’ It doesn’t matter how the numbers end up or how you play them. Once a car company has filed for Chapter 11, dealers will be cut. That’s it. End of story. Yeah, it’s hilarious how many consider it a right to have special legal protection despite the fact that everyone knows what bankruptcy is. I mean, maybe some should be rescued and continue to be subsidized through cash on the hood, but the gov has already saved the majority of dealers by not letting the car companies liquidate. So a portion gets cut, boo hoo, plant and workers and management got cut, too. The tone here in the comments has gone from "we gotta get rid of at least 1/2 the dealers" pre-bankruptcy to "we gotta protect all the dealers" post-bankruptcy. I can't tell you if the same people are arguing both, but this whole thing is NIMBY. So it seems now the prevailing thoughts to many are, "yeah, dealers need to close but not the one in MY town." In Milford, OH a CDJ dealer got cut. They converted to a large used dealer as they're part of the Kerry Automotive group (so that kinda thing can work out for them). I talked to them yesterday and the guy was disappointed but they're still in business.

Like Reply
Bryanska on Jul 24, 2009

We're messing with the free market, which is like messing with nature... Geo-engineering in the economy on a big scale. Bankruptcy is like a forest fire. It clears out dead brush. Those who are afraid to lose unsustainable businesses are operating on the assumption that no new businesses will open and eveything has been invented already.

Like Reply

Recent Comments

Sayahh Is it 1974 or 1794? The article is inconsistent.
Laura I just buy a Hyndai Elantra SEL, and My car started to have issues with the AC dont work the air sometimes is really hot and later cold and also I heard a noice in the engine so I went to the dealer for the first service and explain what was hapenning to the AC they told me that the car was getting hot because the vent is not working I didnt know that the car was getting hot because it doesnt show nothing no sign no beep nothing I was surprise and also I notice that it needed engine oil, I think that something is wrong with this car because is a model 23 and I just got it on April only 5 months use. is this normal ? Also my daughter bought the same model and she went for a trip and the car also got hot and it didnt show up in the system she called them and they said to take the car to the dealer for a check up I think that if the cars are new they shouldnt be having this problems.
JamesGarfield What charging network does the Polestar use?
JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.