Friday, May 15, 2009

When car dealers close, what's in it for me?

Yep, that is a self-serving question. But there is a lot about the Chrysler and GM dealer closings that I don't understand. And while I feel for guys I know at area dealerships, I gotta wonder exactly how this might bite the rest of us too.

First, what happens to the cars?

The last industry figures I saw showed that GM, Chrysler and other dealers had maybe 111 to 114 days of unsold inventory in the pipeline. You can't sell all those just by slapping a "Bud's Auto Sales" banner over the old corporate logo. My guess is that GM and Chrysler buy a lot of them back, using our taxpayer dollars. Maybe to reduce national budget deficits, the government can gin up a version of the old payment-in-kind farm programs and mail us Chevies instead of tax refunds next spring.

Also, how hard might dealers fight being pushed out of business?

They have options other than curling up in a fetal position. Theoretically, state franchise laws protect dealers from forced closings; that's one of the things GM and Chrysler have been struggling with in the back-and-forth so far. Plus dealers should have political allies. Auto dealers generate about 18 percent of retail sales taxes collected in the U.S. and many states. Some already are enroute to Washington to remind lawmakers.

And finally, how will the changing cost structure affect us at the tire-kicking level?

You may see some pretty amazing deals during the transition. But National Automobile Dealers Assocation chairman John McEleney, already warns of maybe driving 50 miles for oil changes and other warranty work. I don't see that exactly. When Kansas City's Saturn dealers dropped that franchise recently, virtually everyone with a wrench flooded our mail boxes and e-mails with invitations to come see them.

Come to think of it, some of them maybe talked to Congress too. Or at least robo-called them.

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