4LT GS RoadsterJeep dealer James Tarbox literally cried in federal bankruptcy court that Chrysler shouldn't be allowed to terminate dealers. Congress is micromanaging Chrysler's and GM's dealer lists to ensure their constituents are saved.
Meet the latest group of people demanding a bailout: Car dealers, protected by an arcane system of franchise laws for which they aggressively lobbied.
There is a need for fewer dealerships among the Big Three automakers. Prior to filing for bankruptcy, General Motors had eight brands and 6,400 dealers. Toyota, which outsells it, has three brands and 1,400 dealers. GM's resources were spread too thin to be effective.
But every state has laws that preserve a distribution structure the market no longer needs, wants or can afford. In most states, a carmaker cannot relocate a dealer to a better area or sell cars over the Internet. And a carmaker cannot terminate a dealer (no matter how few cars the dealer sells or how dissatisfied its customers are) without appearing in court. Even in the unlikely event termination is approved, the carmaker has huge payment obligations.
In Florida, dealers have the right to any payment incentive the manufacturer offers any other dealer in any other state; submit warranty claims at whatever inflated amount the dealer claims is its "retail" price; and make manufacturers give dealers in bad facilities the same rewards as those in good ones. What successful industry operates like this?
Without voiding dealer contracts, GM could not afford to eliminate its duplicative brands; in most states even if you stop building a brand, it is not "good cause" for canceling dealers. The same laws protect the territory of each existing "line make," so the only way GM could provide trucks to non-Chevy dealers is with an otherwise useless brand, GMC.
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Meet the latest group of people demanding a bailout: Car dealers, protected by an arcane system of franchise laws for which they aggressively lobbied.
There is a need for fewer dealerships among the Big Three automakers. Prior to filing for bankruptcy, General Motors had eight brands and 6,400 dealers. Toyota, which outsells it, has three brands and 1,400 dealers. GM's resources were spread too thin to be effective.
But every state has laws that preserve a distribution structure the market no longer needs, wants or can afford. In most states, a carmaker cannot relocate a dealer to a better area or sell cars over the Internet. And a carmaker cannot terminate a dealer (no matter how few cars the dealer sells or how dissatisfied its customers are) without appearing in court. Even in the unlikely event termination is approved, the carmaker has huge payment obligations.
In Florida, dealers have the right to any payment incentive the manufacturer offers any other dealer in any other state; submit warranty claims at whatever inflated amount the dealer claims is its "retail" price; and make manufacturers give dealers in bad facilities the same rewards as those in good ones. What successful industry operates like this?
Without voiding dealer contracts, GM could not afford to eliminate its duplicative brands; in most states even if you stop building a brand, it is not "good cause" for canceling dealers. The same laws protect the territory of each existing "line make," so the only way GM could provide trucks to non-Chevy dealers is with an otherwise useless brand, GMC.
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