Culled Dealers "Win," Don't Stop Whining

Edward Niedermeyer
by Edward Niedermeyer

If you haven’t been following the drama surrounding the effort to restore dealers culled during GM and Chrysler’s bankruptcy, you might need to be brought up to speed. In essence both the cut dealers and the automakers have agreed to send create an arbitration process by which dealers could have the decision to cut their franchise reviewed by a neutral third party. The remaining conflict is over the criteria arbitrators should use to judge dealer viability, as the GM and Chrysler proposition would have forced arbitrators to use the same criteria GM and Chrysler did in the initial cuts. That would obviously have yielded the same results as the initial cull, so the dealers pushed for a set of criteria that is more favorable to their interests. Automotive News [sub] reports that a compromise has been reached in conference committee that would allow dealers to present “any relevant information” to make their case. That bill is now been approved by the House [sub] and is headed to the Senate, where its passage is “virtually assured.” But despite having all but guaranteed an independent review, culled dealers still aren’t happy.

One former owner of an allegedly profitable Chrysler dealership tells BNet:

At this point, I don’t even want my franchise back. I can’t afford to risk my financial future with Chrysler again, like my family did before. What would help me would be some financial restitution. The comparison is, it’s as if somebody broke into your house and then they call you and say, ‘We have all your stuff, you want to buy it back?’ It just doesn’t work that way. They took everything I would use to buy it back

Dealers speaking to the WSJ confirm the message: they don’t want their franchises restored, let alone a review process to possibly reinstate said franchises. Most have been out of business too long, and with the car market still struggling (especially for GM and Chrysler products), few see smooth sailing ahead as reinstated dealers. And with unilateral reinstatement legislation off the table, they’ve got nothing to threaten GM and Chrysler with for financial compensation.

To say that nobody is truly happy with the results of the auto bailout is an understatement. The culled dealers may have taken a harder hit than most, but there’s clearly no desire to make them whole. And honestly, it’s a little surprising that more dealers weren’t cut. Time to man up and open a Kia dealership.

Edward Niedermeyer
Edward Niedermeyer

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  • Jacad Jacad on Dec 11, 2009

    What about this do the amateurs not understand? You invest millions in a privately owned non-subsidized franchise for years following the dictates of the manufacturer. The manufacturers receive billions of public dollars, lie to the Auto Task Force telling them they need to shed dealers, lie to Congress that dealers cost them billions a year to maintain, and then overnight wipe out the dealer's total investment bankrupting many of them. Immediately after the manufacturers sell this story, they then hit the streets trying to sell many of these same franchises to new people with more stringent controls and therefore compounding the lie that dealers were an expense to begin with. This has been one of the biggest scams in history as long as the manufacturer never has to reveal their criteria for cancellation. In many cases I am sure the canceled dealers were under performing but in many cases that is a proved lie. It has been proved many of these dealers had exceptional sales performance, excellent Customer Satisfaction, and were profitable. Were they canceled because someone didn't like their politics, their color choice in the showroom, or some other absurd criteria dreamed up? Anyone who does not understand the issue either doesn't believe in free enterprise or are simply so blinded by jealousy that someone else might be having more fun than they are that they have lost all perspective.

    • See 1 previous
    • Dmrdano Dmrdano on Dec 11, 2009

      Akatsuki, what are you smoking? I'll only comment on a couple of your uninformed points. Dealers who were making money for themselves and for Chrysler were closed without any significant help to offset their losses, including the cost of corporate-mandated improvements. Besides being morally wrong, the cuts violated numerous state franchise laws. And consumers do care. Many former consumers now have no choice but a long drive to a distant dealer, or a switch to another manufacturer. I recently bought a Nissan and live 80 miles from the nearest dealer; trust me, I won't make that mistake again. I don't usually get this cranky. Sorry.

  • Jacad Jacad on Dec 11, 2009

    Again, Akatsuki, an amateur analysis. Obviously one having less fun. No dealer signed up to be a"whipping boy". We all made large investments of actual cash as a business decision to purchase a franchise protected by certain laws. The same as any other regulated business investment in any other field. GM and Chrysler, with Government assistance and public money, lied their way into breaking their contract. As far as the common man and consumer not caring, sing that song to some other amateur without a clue. Tell that story to thousands of customers who call daily asking their former dealers where to take their car next and the over 100,000 who are soon to be unemployed.

    • Dmrdano Dmrdano on Dec 11, 2009

      Amen! Unfortunately, the politicians only have to keep ignorant people ignorant, because there are plenty of them to keep the reelection cycle going.

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