DEALership or No DEALership

I spent a good portion of today at a GM dealership. This particular dealership is one of the top performers in their market and wasn't fearing the Federal Express van when it pulled in to the parking lot. The same couldn't be said for thousands of other automotive sellers across the country. To them, the Fed Ex guy was about as welcome as a sneezing Mexican immigrant worker in the back seat of the car pool Prius. You see, GM chose to send Dear John letters via overnight mail. I guess it is easier to deliver the "it's not you, it's me" line that way instead of over the phone.

Despite not being at risk, technicians in the service department couldn't help but continually search the web for news about other dealership's situation. Technicians seem to be worse gossips than the Tuesday afternoon neighborhood coupon swap/poker game woman's group.

I've never claimed to be smart so I may come as no surprise when I say I don't really understand what is being accomplished in these mass closings. Automotive dealerships are independent businesses. They are not assets held by the big three (or any other manufacturer) and their employees are not on any corporate payroll in Detroit. These closures are not reductions in expense. Closing them would be akin to Mary Kay telling their Pink Cadillac driving associates their services are no longer needed. Other than further eroding GMs share of the pink vehicle market, this severance would not save Ms. Kay anything. She'd only be limiting her distribution network.

The same is true of the actions being taken by GM and Chrysler. In fact, GM expects sales to further erode precisely because of this smaller network. They also claim most of the ejected dealerships are struggling businesses that would probably be closing soon anyway. Grandpa is slowing down a bit in his old age, too. Should we put him out of his misery now?

The Obama administration claims to not want to be in the Automotive Industry but I somehow feel this cut back of dealerships is partly being done to show Washington "look we are making progress"! Every day another article appears indicating further influence of The ONE's administration in the business world. Reading through them, it becomes painfully clear, these guys just don't get it when it comes to running any company. It is the Automotive Task Force driving many of the recent decisions by GM and Chryser; the dealership closings among them.

No figures are yet available on how many people will be put out of work with these closings but with nearly 3,000 dealerships going away with, I'd guess, around 50 employees each you can do the math. I am sure there is a master plan somewhere in which this decision makes sense. Perhaps it is a way to deepen the prospective pool for civil servants.