Wednesday, July 22, 2009

The end of a festering problem is always messy

The pre-existing US auto industry has proven unsustainable in the recent market conditions. Fact.

So Bankruptcy has taken hold and GM and Chrysler are working their way through the destruction of all shareholder value, most bond value, and the value of many other stakeholders in order to make it out to the promised land of a rejuvenated business with a vastly lightened load.

And as many of us have heard, one of those stakeholders which was crammed down during this process was the dealership network. Mass closings are being enforced, franchiser liability for dealer contracts was thrown out the window, relatively small wind-down payments were made, and a secretive "arbitrary" process ensued to choose which dealers went to the chopping block.

And now... no surprise the Auto Dealer Economic Rights Restoration Act has reared its head. As the WSJ reported today, the White House is gearing up for a massive fight with Congressional legislators whose (formerly) wealthy and (formerly) bloated dealer constituencies have stirred the hornets nest declaring that they were treated unjustly and want to be reinstated.

The White House thinks of it as "meddling" with its golden plan to "restructure" the industry. True. But that is what you get for steamrolling.

The dealers consider it a restoration of their legal rights. True. But that is what you get for hitching your wagon to a tired horse.

In fact, the dealers are really only asking to be allowed to compete in the market to see which dealers die-off naturally, instead of being subjected to an artificially random closure slate.

Yuk. Messy. Predictably Ugly. The end of a festering problem.

In fact, it doesn't really matter who is right in this penultimate death-rattle. The point is that the size of the industry in its pre-existing configuration was unsustainable. It was unprofitable. It was not going to survive in a capitalist system.

I regret the time wasted and the dollars spent fighting this case, because it will undoubtedly be a Pyrrhic victory.

But can we really expect anything more from a compassionate Congress that has been well-funded by both a dealership club and an OEM dynasty?

After all, I was walking across the very same Capitol Hill today on which this battle is being fought and as I walked behind the Capital Building, I was struck by an automotive image.

No less than 26 black Chevy/GM Suburbans parked around the perimeter! How can you let the dealers or the OEM go away when they drive you to work every day? Really.

8 comments:

Jorge said...

Well said.

That's the way to do it, catch'em with their hand in the cookie jar.

Also, worth mentioning that those vehicles have a whopping 14/20 mpg...another sign of hypocrisy from the folks that make decisions under the Statue of Freedom.

Elizabeth Stratton said...

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