I know Obama has a dog in this fight. What I don’t know is why. For some reason the White House is strongly opposed to legislation aimed at restoring dealerships that were eliminated as a part of the GM and Chrysler bankruptcy filings:
The administration said today in a statement that “the decision by Chrysler and GM to rationalize their dealer networks was a critical part of their overall restructuring to achieve long-term viability in order to save jobs in the long run.”
The statement also said it would set a “dangerous precedent” to “intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point.”
Really? Didn’t the government “intervene into a closed judicial bankruptcy proceeding on behalf of one particular group”? Well, yes, in fact it did. The UAW wound up the majority owner in a major car company. Or two. Coincidentally, the UAW was a generous contributor to the Obama campaign. I wonder if that had anything to do with it.
Here’s why this is mysterious. First of all, it doesn’t cost the manufacturers that much in the scheme of things to have more dealerships: sure, they’ll be able to cut dealer support staff at regional offices, and yes, they finance unsold stock, but come on – that’s not going to make or break GM or Chrysler. And if it did, bankruptcy gave them an opportunity to re-write the franchise terms as easily as it allowed them to whack dealers all together.
So why was the culling of dealerships such a key element in the bankruptcy reorganization plan? Why does it continue to be such a prickly issue with the White House? And is there any truth to the allegations that dealers were eliminated based on their party affiliation and campaign contributions? I’m just asking, on behalf of the conspiracy theorists.
The Autos have been trying to eliminate franchises for a long time now, and bankruptcy provided a handy vehicle. Along with Obama’s Car Czar, they took the opportunity to ram it through with what they thought was impunity. But damn! Those pesky dealers hired lawyers and started whining to their Congressional delegates about the Autos trammeling state franchise laws. The House Rep’s, looking like they might have to bend to the wishes of their constituents, sparked Barry’s wrath and a barrage of harsh words directed at his underlings on the Hill.
So what’s really up with the dealer brooming? Are GM and Chrysler trying to eliminate competition? You would have to think so. Let’s see, less competition, higher prices? Yes, usually. And then there’s also the fact that if the dealers sell more cars per franchise, and are more profitable, the manufacturer could charge them more per unit, instead of having to cave to the dealers demands for manufacturer incentives. Everyone wins except the consumer.
Or maybe it has something to do with GM selling new cars on eBay? Currently they can’t do that legally in most states since state franchise laws prohibit the manufacturer from making direct sales. So the pilot program will require buyers to complete the transaction through dealers. But again, why does GM care how many dealers there are? I don’t know – maybe less competition, better ability to establish minimum prices? I’m just asking.
Or maybe the new GM business model will eliminate dealers all together at some point, and just turn them into giant GM service bays. I wonder if the dealers that didn’t get dumped had unionized mechanics? Maybe the UAW wants to retrain their factory workers as mechanics. Again, I don’t know. I’m just wondering.
And here’s something else that I’ve been wondering about: doesn’t that Card Check Bill have a whiff of payback about it too? If Card Check were to get passed, it sure would make it easier to unionize those dealerships that aren’t unionized, wouldn’t it? I don’t know, I’m just asking.
What I do know is that GM’s VP for North American communications has said that the eBay pilot program is not, repeat, not "related to GM's ongoing dealer cull." So I guess that settles that.
I think the President is going to be a bit miffed at his House staff. It seems they defied him and passed the spending bill with the dealership reinstatement portion in tact. It will be up to the Senate to take it out. And it’s hard to say if old Harry Reid is on board, telling us on one hand that it’s not on the top of his agenda, and on the other that “there are winners and losers” in bankruptcies. True. But usually the White House doesn’t determine who they are. Handing the UAW the keys to the executive washroom while skewering bond holders and dealers seems a little high handed.
Obama seems to be a little too comfortable with such imperialistic techniques and Chicago-style thug tactics. Perhaps it’s because he was conceived by the Chicago machine, and is surrounded by so many Czars.
He’s probably going to be pretty cranky this weekend. Not only did his House disrespect him, but it appears that his Senate dissed him by dropping Card Check from the Employee Free Choice Act. Such insurrection is not likely to be taken lightly. Someone’s going to get whacked. I wonder who? I’m just asking.