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Report: Government made car dealerships close too fast
The front window of the Manhattan Chrysler dealership in New York City.
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TEXT OF INTERVIEW
Bill Radke: A new report on the financial bailout program says the government pressured car companies to close too many dealerships too fast. The watchdog for the program says those closed dealerships hurt the economy. Marketplace's John Dimsdale joins us live from Washington. Good morning, John.
John Dimsdale: Hello, Bill.
Radke: What does this report criticize specifically?
Dimsdale: Well the special inspector, Neal Barofsky, blames the Treasury Department for not giving enough attention to the economic fallout to local economies. By ordering these quick dealer cutbacks, Barofsky says the government potentially added tens of thousands of workers to local unemployment roles, all based on a theory that it would help the companies' profitability.
Radke: Well John, ttake us back, then, to 2009. Why were the car companies getting pressured to close dealerships?
Dimsdale: Well the conventional wisdom at the time was that the failing carmakers had a bloated number of dealerships. So when the government used TARP money to bail out the companies, it rejected GM and Chrysler's intial plans to gradually phase out around 2,700 local dealerships over five years. So that forced GM and Chrysler to come back with a more drastic schedule, essentially shutting down 2,200 dealers right away.
Radke: And is the government now defending its decision?
Dimsdale: It is. They say this report is too narrow, that it doesn't factor in the overall effect on the jobs saved by keeping GM and Chrysler in business. Not only did the dealership downsizing save hundreds of thousands of factory jobs, Treasury says that it also stabilized the car parts industry and preserved the savings of millions of retired investors who depend on their stock in GM and Chrysler.
Radke: Interesting controversy. Marketplace's John Dimsdale, thank you
Dimsdale: You're welcome.
Great! Imagine that! Wow! What an awesome observation... now what's going to happen about it?! Nothing. Those of us who suffered, were tossed out for no reason, were stripped of our state rights, were treated unjust... what happens for us now?? NOTHING.
Are our franchise agreements being put back into place? Not without throwing tens of thousands to hundreds of thousands of dollars at a slightly fair arbitration process.
Are our parts, special tools and vehicles being bought back or money being refunded that had to be paid to Chrysler to take our vehicles after a 26 day "wind-down"? That's a big fat NO. As a matter of fact, we are being forced to sell them for penny's on the dollar to those "chosen" to remain in business.
Are our customers, employees, and communities going to continue to have to suffer because they now have to drive further for service, not be able to find a job or have to switch careers completely after 20-30 years of working the same career, or no longer have another business in their town to place an ad in the paper or buy that large box on the back of the t-ball t-shirt (if not the entire t-shirt in some communities)??? Yep.
So what's the point of continuing to talk about this display of MASSIVE ignorance, arrogance and greed by the people involved? I would be happy to name them for anyone interested but I digress. The fact remains that nothing is going to be changed about this situation. I, for one, won't be holding my breath expecting a rectification.
"Not only did the dealership downsizing save hundreds of thousands of factory jobs, Treasury says that it also stabilized the car parts industry and preserved the savings of millions of retired investors who depend on their stock in GM and Chrysler."
You're kidding, right?
Apparently, no matter what the govt wants to do, it's always "correct".
