House Passes Dealer Restoration

Edward Niedermeyer
by Edward Niedermeyer

Your automotive industry bailout probably just became a little more expensive. Automotive News [sub] reports that the House of Representatives has passed a spending bill including provisions to reinstate dealers culled during GM and Chrysler’s restructuring. The measure now moves to the Senate, where 24 co-sponsors of a similar bill should have little problem rounding up votes (although Senate Majority Leader Harry Reid tells the NYT that the bill is not at “the top of the agenda in the Senate at this time”). The problem is that President Obama has urged congress to dump the reinstatement bill, indicating that he will almost certainly veto it. Meanwhile, a non-legislative “solution” to dealer grievances is still being touted as the ideal solution. Which indicates that GM and Chrysler will have to pay off dealers, a move that would likely cost taxpayers even more money.

Chrysler VP for Network Development and Fleet Peter Grady is firing back at the House passage on its blog, arguing that

“our rationale for choosing which dealerships would not be going forward with the new company has been criticized as unfair and unfounded. That accusation is rebutted in large part by a key finding by U.S. Bankruptcy Court Judge Arthur J. Gonzalez, who wrote, ‘The Court also finds that no evidence has been presented to the Court showing that the Debtors made their individual rejection decisions irrationally, such that the rejections demonstrate bad faith or whim or caprice.’”

Edward Niedermeyer
Edward Niedermeyer

More by Edward Niedermeyer

Join the conversation
4 of 17 comments
  • Ruckover Ruckover on Jul 17, 2009

    "Yes, keep the dealer cull. But, it should have a rational basis." Well, what is rational? Any set of determining factors will be subjective. Profits? As has been said, that has more to do with parts and service than moving cars and trucks. Great customer satisfaction? It is nice, but that does not mean that the dealer is advertising, selling many cars, in a good location. Loyalty to the brand? Loyalty only lasts as long as there are enough PFDs for everyone on the sinking ship. Anyone who has ever hired a person, fired a person, given a grade, chosen a starting lineup, or given a promotion knows that there is only so much rational basis behind these moves. All factors come into play when making "rational" choices, and I am sorry to say, but the fact that some people are not pleasant to work with is, also, a rational factor in making a choice.

  • Ronin Ronin on Jul 18, 2009

    I'm looking at the constitution now, trying vainly to find even a hint that this is within the authority of that body. More, what about nail parlors, dog walking businesses, barbers, gas stations, zillions of other businesses that go defunct. Why are some businesses more equal to receive unconstitutional support than others?

  • Campisi Campisi on Jul 18, 2009
    “Yes, keep the dealer cull. But, it should have a rational basis.” Well, what is rational? For most people, "rational" means "what I think is right."
  • ConspicuousLurker ConspicuousLurker on Jul 20, 2009

    This is what happens when you take a private enterprise and turn it into a government program. EVERYONE feels entitled to benefit, because EVERYONE pays for it. If they want Congress to intervene on their behalf, Congress should intervene on behalf of the rest of us and preempt the self-serving state franchise laws. Of course this will never happen. Who are some of the most powerful businessmen at the district level? Small town car dealers.... This whole thing is turning into an exercise in musical chairs, only it appears that the ordinary taxpayer is the one who is going to be left without a chair at the bailout buffet.