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Chrysler dealerships challenge the hit list

May 29, 2009 |  1:00 pm

Chrysler, dealerships, layoffs, President Barack Obama, partisan, GOP contributors I was going to weigh in on the controversy surrounding the closure of Chrysler dealerships -- some Republicans argue that contributors to the GOP were targeted -- but then I saw this definitive piece by Mark Tapscott of the Washington Examiner. Read the whole thing, because his analysis develops over the course of a couple of insightful updates.

On a related issue, Tapscott quoted Rep. Vern Buchanan (R-Fla.) lamenting the closure of one of the 23 dealerships he owns. It's a little ironic to hear a Republican complain about the loss of dealership jobs after his party pushed so hard for automakers to sacrifice more (largely unionized) factory workers, but it's worth noting that the former may actually outnumber the latter. Chrysler plans to eliminate 789 dealerships (nearly one fourth of its total), which employ more than 40,000 people, the National Automobile Dealers Assn. estimated. By comparison, the company cut 32,000 managerial and factory jobs in 2007 and 2008 as it struggled to stay afloat. Patterico's post focused on a comment (by a lawyer for the dealers) that Chrysler executives didn't want to shut down so many of their dealerships -- that was the Obama administration's call. But every independent analysis I've heard or seen has argued that U.S. automakers had far too many dealerships, which were draining capital and blocking badly needed changes in the business. In particular, the dealership structure was preventing the companies from shedding money-losing brands. This is from a recent Times story about the dealership cuts:

To show the drag of dealerships, Chrysler said in a bankruptcy filing that Toyota, with about 1,400 U.S. dealers, sold an average of 1,292 cars and trucks per showroom last year while Chrysler, with about 3,280 dealers, sold 303 vehicles per showroom.

That's an average of less than a car per day, which suggests many dealerships have been sustained by their service bays, not their sales reps. If that's the case, there should be plenty of work for laid-off Chrysler mechanics, assuming they can find a place to do it. Laid-off salespeople, on the other hand, face a gloomier future.

Photo: A defunct Dodge dealership in Burien, Wash. Credit: AP Photo / Ted S. Warren

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