House Majority Leader Steny Hoyer, D-MD, has written President Obama a letter seeking to “delay final action on proposed closures pending further review of the decision to consolidate dealerships and the process by which Chrysler and GM selected the dealerships to close.”
Hoyer’s letter, which was also signed by Rep. Chris Van Hollen, D-MD, and Rep. Daniel Maffei, D-NY, wonders if some of the closures are related to efforts to get out of contracts “which could require expensive buy-outs under normal conditions,” and “allegations that dealers that have previously stood up for their rights against the manufacturers are being targeted by these closures.”
The three congressmen add two graphs that effectively undercut th rationale for any government-mandated dealer closings:
“Closing these dealerships will put over 100,000 jobs at risk at a time when our country is shedding jobs at an alarming rate. We also question the criteria being used to determine which dealerships should be closed and the fundamental fairness involved in this effort. It is our view that the market rather than leaving it up to the manufacturers whose poor leadership contributed to their demise. Furthermore, we believe car dealers will be key players in any effort to revive the American auto industry.
“We believe the dealerships are one of the auto industry’s key sources of strength and the manufacturers should continue to honor their agreements and contracts. The dealerships, and their more than 1 million employees, form personal relationships with customers that often contribute to brand loyalty and will be key to General Motors’ and Chrysler’s recovery following this economic downturn. While we understand the desire to reduce the number of unprofitable dealerships, no one has yet sufficiently explained the need to close profitable dealerships.”
The missive closes with something of a tart warning to Obama: “We may consider legislative proposals to ensure that dealers and their employees are treated fairly, and we look forward to your timely response.”
While not directly related to concerns expressed by congressional Republicans and conservative journalists and bloggers that partisan factors somehow entered into decisions about which dealerships to close, the Hoyer letter illustrates how under nationalization of previously private businesses decisions that normally would be made strictly on the basis of profit-and-loss considerations become intensely politicized.
Also of interest on this issue are revelations reported over the weekend by The Wall Street Journal that federal officials ignored worries among Chrysler executives about the financial health of Italian automaker Fiat, which is slated to buy what’s left of the U.S. company following completion of the bankruptcy process.
If you are not a Journal subscriber, Tom Blumer at NewBusters has a detailed report on the main points of the story.
