Why are GM and Chrysler Closing Dealerships?
To be honest, I don’t really know why GM and Chrysler are closing dealerships. They have taken Billions of dollars from the government in bailouts, and as part of the restructuring they are closing thousands of dealerships. I’ve talked to several people and read several articles, and nobody really seems to have a good answer.
The most I’ve managed to come up with so far is that GM says its dealers have to compete with each other giving the consumers too much leverage. They say this could hurt future sales, but I just don’t see it. GM has a price that it sells cars to its dealers. After that point, why would they care how low the dealer sells it for?
The thing is, many of these dealers aren’t going to go quietly. GM doesn’t own the dealerships, they just sell the cars to them. Many of these dealerships will stay open, selling used cars and running their service shops. They make more money on these than selling new cars anyways. Guess what, they will also probably go to another brand and offer their services to them. Now Toyota and Honda and Nissan and Ford will be the companies they are competing with instead of themselves. How is this a good thing?
For the sake of all the money I’ve given this company as a taxpayer, I hope I am wrong. I hope they succeed, I just don’t see it happening. I said it in December before we gave them all this money, they were just prolonging the bankruptcy. I said that life will go on, and a bankruptcy wouldn’t be the end of the world as we know it. Things are going to be fine. Chrysler is close to coming out of bankruptcy after only a month. However, as a majority shareholder in the company, I would like to know why they think this is a good idea. It hurts consumers, it costs jobs, and it will increase their competition from the other automakers. If I’m missing something, which I actually hope I am, please let me know.
It’s the End of the World as We Know It (and I Feel Fine) [Video]
P.S. Work has been crazy busy recently and my laptop broke which is why I have had a lack of posts recently. I promise I’ll write more as soon as work slows down and I get a new laptop.