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Obama Administration Cuts Two DeVos Car Dealerships
#21
Some Ala. car dealers to fight shutdown orders

Associated Press, 05.19.09, 06:40 PM EDT

Schein was one of 34 car dealers in Alabama who have gotten letters from Chrysler or GM - or both - saying the automakers were severing ties, according to a trade group for dealers. She said she won't just shutter her shop.

"I'm going down fighting," Schein told The Birmingham News. "I have 70 employees who depend on me to make a living."

U.S. Rep. Artur Davis, a Democrat from Birmingham, said Tuesday he plans to join the fight to try to keep the dealerships open. Davis said he and 30 other U.S. House members have written a letter to the Presidential Task Force on the Automobile Industry expressing concern about its demands that Chrysler and GM eliminate dealerships.

Davis said in many Alabama towns, the car dealerships are major employers and important parts of the community.

"Something that's not understood is it doesn't cost the auto manufacturer anything to run the dealership," Davis said. He said the dealers buy the cars and pay the overhead for the operation.

Schein, whose late father, Bill Strickland, founded the family dealership in Columbiana in 1972, said she was perplexed by the decision to end her agreements. In a fast-growing, prosperous county, Schein said there are no other dealers offering her brands in the Pelham area.

Neither GM nor Chrysler indicated in their letters specifically why they had targeted Schein's Chevrolet dealership and her nearby Susan Schein Chrysler Dodge. Generally, they have said they targeted underperforming dealerships or ones that didn't meet other criteria.

"Sure we had a bad year last year, but everybody did," she said.

Pelham Mayor Don Murphy also pledged his help to try to keep Schein's dealership open and employees on their jobs. He said he is asking state and federal elected officials to help keep Schein's dealership open.

"The truth is we cost them nothing; dealers bear the costs," said Schein. "We pay for the cars, pay taxes. We pay employees."

President Barack Obama "needs to put a stop to this madness of GM closing places that are doing well," Murphy said. "I'm mad about this. We need to challenge it."

The Michigan automakers are reducing the number of their U.S. dealerships so they can receive more federal aid to keep operating.

At Susan Schein Chrysler Dodge on Monday, the news was already beginning to effect business. Eddie Hicks, a service adviser, said fewer people were bringing in their cars for repairs. He said employees were in a "state of shock" upon hearing news of the possible closing.

"We're the only Chrysler dealership in Shelby County, so we just knew we'd stay," Hicks said. "I have a wife and two kids at home. To go from a secure income to this is kind of tough."
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#22
Here is a letter from a DEMOCRAT Congressman in Virginia to the Administration:




May 19, 2009

Congressman Tom Perriello (D-VA) opposes decision to close dealerships

The Honorable Steven Rattner
Counselor to the Secretary of the Treasury
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Mr. Rattner:

We are writing to express our serious concerns regarding the decision by the Auto Industry for the rapid and potentially disorderly elimination of thousands of Chrysler and General Motors dealerships. This action, if implemented, could put approximately 150,000 people out of work. Since these dealer reductions and its ripple effects would have a serious and adverse impact on the United States, we would like to ask you to inquire with the companies about their rationale for revoking franchise agreements with thousands of dealerships.

To justify these job losses, GM and Chrysler are apparently relying on a misperception that new car dealers create a cost burden to auto manufacturers. This is not true, on average reportedly almost all of an automaker's revenue comes from dealers purchasing the automakers' vehicles. Far from saving money, a rapid reduction in dealerships could very likely reduce GM's and Chrysler's revenue and market share.

Automobile dealers are one of the largest private sector employers in the United States, providing tens of thousands of local jobs and contributing millions of dollars in tax revenues to states. Auto dealers are anchors in communities throughout the country and many times ownership is passed down from generation to generation. In addition many auto dealerships are minority owned and have traditionally provided strong local community support. Each dealership creates an average of 52 neighborhood jobs and these positions typically pay twice the national average as other retail-sector jobs. Dealers have invested about $233 billion to create an auto sales network that provides a vast distribution and service channel for consumers. In fact, automakers created the franchise dealer network specifically to lower their costs, as they outsource virtually all costs associated with selling and servicing cars.

Last year, over a thousand auto dealers closed their doors for good. Further thinning of the dealer ranks through normal market, dealer-driven consolidation, and other forces is inevitable. The action being proposed has not taken into effect the impact on communities and workers, and without any evidence that massive and immediate dealer reductions are necessary to restore the financial health of GM and Chrysler.

We appreciate the enormity of the mission your Task Force has undertaken to help the auto industry. However, we are concerned the reduction of dealerships, at a time when the national unemployment rate is rising, is counterproductive policy. We respectfully request that the Auto Task Force urge the companies to provide more transparency and justification on forced dealership closures, revisit their decision and consider the damaging effects on local communities.



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#23
I was in West Virginia over the weekend. They were all talking about this. They said that the Obama administration is forcing over half of the state's dealerships to close. This article does not state what percentage of the state's dealerships are closing. But I did hear comments like... "If they think I am driving an hour or two just to buy a Chevy, they're crazy."

Rahall Submits Testimony in Support of WV Auto and Truck DealersHuntingtonNews ^ | 05/21/2009 | Not credited

Posted on Friday, May 22, 2009 10:13:02 AM by WVKayaker

U.S. Rep. Nick J. Rahall, D-WV, on Thursday, May 21, 2009 submitted testimony to the House Committee on the Judiciary hearing on the ramifications of auto industry bankruptcies to express his grave reservations with recent announcements by Chrysler and General Motors to cut nearly 1,800 dealerships nationwide. Thursday's action follows Rahall’s letter last week to President Obama’s Auto Task Force urging reconsideration of their current strategies to avoid the substantial negative impact on West Virginia’s economy and the Nation as a whole.

“Automotive dealerships are an important economic engine. Removing them will cause significant losses to West Virginians – losses we can’t well afford,” said Rahall. “Dealers generate more than 90 percent of manufacturer revenue. A rapid reduction of dealerships undercuts that revenue and does nothing to address concerns about production or stimulate innovation.”

Under the current plan put forth by the Auto Task Force, West Virginia could lose at least 20 General Motors and 22 Chrysler dealerships. That action would reduce the number of dealerships in this rural state to a little over 125 store fronts. It could also add at least 1,000 workers to the unemployment role. Considering every automotive job approximately equals five support positions, the effect on employment opportunities would be devastating.

“In West Virginia, dealerships are part of the economic solution, not part of the problem. Franchised dealers account for vast numbers in sales, sales taxes, and titling fees for the highway fund,” said Rahall.

“In these challenging economic times, closing businesses and eliminating jobs is not the answer. Our families and communities will take the hit and pay the price for the missteps and mistakes of others,” stated Rahall.


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#24
Do you have any articles explaining the thoughts behind GM & Chrysler's decision to cut these dealerships?

I don't know enough about it, always good to get both sides of the story.
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#25
It would be Obama's job to explain how closing these dealerships and jettisoning 189,000 employees of individually owned dealerships will help GM or Chrysler sell more cars. These franchises are not like the ones closed by Starbucks. Starbucks headquarters owned the 600 closed locations. These automobile dealer franchises are individually owned. These employees are not on the payrolls of GM or Chrysler.

The only thing for sure about this move is that the price of these cars will go up, because you have fewer Chevy dealers competing with each other. This price increase will be on top of the $1300 per car emissions costs that Obama tacked on to the price of a new car. Plus fewer people will be able to afford a new car... the 189,000 employees create hundreds of thousands of jobs for other people. And those people's jobs are now at risk.

BTW, you can criticize me for stating that the Obama administration is cutting these dealerships, but they are in control.

GM Bankruptcy is coming next week. And look who is doing it.



REPORT: GM Bankruptcy Next Week

Last Update: 10:24 am

The Obama administration is reportedly planning to steer General Motors into bankruptcy court next week.

The Washington Post says GM would receive nearly $30 billion dollars in additional federal loans under the draft bankruptcy plan.

A source quoted by the Post says that's a starting figure in negotiations between the administration and the company. It would bring the government's investment in GM to nearly $45 billion.

Previous reports have indicated the government plans to take at least a 50% stake in the automaker, along with the right to name board members.

Meantime, the Post says the administration is also preparing to pull Chrysler out of bankruptcy, perhaps as soon as next week.


http://www.wxyz.com/news/story/REPORT-GM...ALmGg.cspx
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#26
MichMan Wrote:It would be Obama's job to explain how closing these dealerships and jettisoning 189,000 employees of individually owned dealerships will help GM or Chrysler sell more cars.


Politically perhaps, but I think it's primarily GM and Chrysler's job.

Quote:The only thing for sure about this move is that the price of these cars will go up, because you have fewer Chevy dealers competing with each other. This price increase will be on top of the $1300 per car emissions costs that Obama tacked on to the price of a new car. Plus fewer people will be able to afford a new car... the 189,000 employees create hundreds of thousands of jobs for other people. And those people's jobs are now at risk.

Weren't you just a few weeks ago criticising the Obama administration for taking action to save these jobs at all? Now you're criticising them because some won't be saved? Your preference was that all the jobs would go, so it's a bit rich to criticise someone for not saving some of them.

Quote:BTW, you can criticize me for stating that the Obama administration is cutting these dealerships, but they are in control.

GM Bankruptcy is coming next week. And look who is doing it.

So if I lend you money and tell you it's on the condition it's not spent on booze and hookers, that means if you spend it on roulette instead, it was my decision, because I was in control? Please.

I ask again for some information on the thinking behind closing these dealers. I'm sure they have some sort of reasoning, I'm wondering what it is. I'm assuming that since you're so critical of the decision you must have checked it out and know what it is .... so it's a little concerning you won't share.
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#27
Funnily enough, as I try to find info, all the articles talk about Chrysler shutting down dealerships, not Obama.

http://www.bizjournals.com/albany/storie...ory10.html

They even mention

Quote:Company executives plan to visit the Capital Region in the next 90 days and reveal their game plan

Huh? But from what you've been saying MichMan, this plan isn't Chrysler companies exectuvies "plan" at all, it's the Obama administration, and Obama should be the one explaining it!

Indeed, according to an independent industry analysis the closures "means fewer costs to operate its dealer network"

Similar comments are made re the GM closures -

http://GM knows it will lose sales in th...gman said.

Seems like GM and Chrysler are making sensible moves to me. Shall I credit Obama with them, or GM and Chrysler?
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#28
Quote:Weren't you just a few weeks ago criticising the Obama administration for taking action to save these jobs at all? Now you're criticising them because some won't be saved?

No. Again. Faulty premise. Faulty conclusions. You are really good at that.

Quote:GM knows it will lose sales in the short-term, but over the long haul, fewer dealers will mean higher per-vehicle profits, Bragman said.

So the only goal I can see is that Obama is forcefully driving up the price of GM and Chrysler cars... And in the process he is putting hundreds of thousands of potential consumers out of work to achieve the goal of a higher priced car. And this will help them sell more cars in what way?

Quote:according to an independent industry analysis the closures "means fewer costs to operate its dealer network"

Which operating costs? These dealerships are privately owned. The employees are employed by the dealership, not the auto makers. Showrooms, the parking lot, the property taxes, etc are ALL paid by the local dealership. Please explain which of the operating costs at these dealerships are funded by GM/C.

If you want to look at it in terms of operating costs, one of the biggest operating costs of these dealerships is GM/C. The wind blew down a sign of a local GM dealer. Could they go to a local sign company and get a new one? No. They are under contract to order it from GM. It costs thousands more to get it from GM. But their franchise agreement states that they must get these things from the franchisor.

So tell me, WHICH operating costs of these dealerships are being borne by GM/C?
_________________


BTW, these are not partisian attacks on Obama. The letters posted here are from Democrat Congressmen.
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#29
MichMan Wrote:No. Again. Faulty premise. Faulty conclusions. You are really good at that.


You seem to have missed the question marks. That's a hint - means they're questions, not conclusions.

So you support the government bailing out the auto-manufacturers?

Quote:GM knows it will lose sales in the short-term, but over the long haul, fewer dealers will mean higher per-vehicle profits, Bragman said.

So the only goal I can see is that Obama is forcefully driving up the price of GM and Chrysler cars... And in the process he is putting hundreds of thousands of potential consumers out of work to achieve the goal of a higher priced car. And this will help them sell more cars in what way?[/quote]

Obama? The articles spoke about GM and Chrysler executives, not Obama. But yes, that does appear to be a part of their strategy. It seems the idea isn't to sell more cars, but to sell cars profitably. Don't you think that's a good idea? You'd prefer them to sell more cars at a cheaper price and then go out of business and sell no cars at all?

Quote:according to an independent industry analysis the closures "means fewer costs to operate its dealer network"

Which operating costs? These dealerships are privately owned. The employees are employed by the dealership, not the auto makers. Showrooms, the parking lot, the property taxes, etc are ALL paid by the local dealership. Please explain which of the operating costs at these dealerships are funded by GM/C. [/quote]

I'm not making the claims, and industry expert is. Clearly you are, since you obviously know more than the folk being quoted .... so could you please explain why you're not being cited as an industry expert?

Me, I'm guessing there's lots of costs you know nothing about, and "real" experts do.

Quote:So tell me, WHICH operating costs of these dealerships are being borne by GM/C?

No idea. I'm just quoting a supposed expert.

Quote:BTW, these are not partisian attacks on Obama. The letters posted here are from Democrat Congressmen.

Politicians are by definition partisan, and ultimately that partisanship rests with their constituents.
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#30
Quote:So you support the government bailing out the auto-manufacturers?

#1 I have no idea where you came to that conclusion. (Question mark or no question mark)

#2 You know that Obama and his administration are forcing these decisions. If I put a gun to your wife's head and tell you that you have to throw one of your children off the boat, who is responsible when you do it?

#3 Please cite the reports by these "industry experts" showing how all of these dealership operating costs are pulling GM/C under.

#4 Please show me one Obam supporting Democrat politician that believes that shutting down the local car dealerships is good for the economy.
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