Below The Beltway

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Now Auto Dealers Are Asking For A Bailout

by @ 5:51 pm on February 16, 2009. Filed under Auto Industry, Business, Economics, Politics, Virginia, Virginia Politics

Auto dealers in Virginia and several other states are seeking protection from the state that would make the task of reforming America’s auto industry far more difficult and expensive:

WASHINGTON — Auto dealers in 13 states are pushing for new laws that manufacturers say would raise their costs for killing brands by billions of dollars.

Michigan is not among those 13 states.

The action by dealers highlights the economic pressures tearing at the industry’s traditional relationships as General Motors Corp. and Chrysler LLC try to shed costs as part of their survival plans due to the Obama administration Tuesday.

Costs from new laws to protect dealers left without cars to sell could hit General Motors Corp. the hardest, as it’s seeking to shed up to four brands as part of its $13.4-billion restructuring. Other automakers also are shedding hundreds of dealerships in the face of the worst market for new cars and trucks in three decades.

The proposals “amount to a retroactive risk-free business investment,” the Alliance of Automobile Manufacturers, which includes Detroit automakers and Toyota Motor Co., said in a statement. “None of these measures helps to protect the jobs of thousands of dealer employees who would not receive any share of the dealer payout.”

Here in Virginia, pro-dealer bills have sailed through the House and the Senate, and their fate is in the hands of Governor Kaine.

If it passes, and if similar laws are adopted around the country, then the ability of auto manufactures to restructure themselves by killing obsolete brands and terminating dealer contracts will become much more expensive, which makes any restructuring more expensive and less likely to succeed.

Yea, this is all working out just fine.

H/T: Bearing Drift

One Response to “Now Auto Dealers Are Asking For A Bailout”

  1. [...] to entrench auto dealers’ nontermination/buyout rights yet further [Detroit Free Press via Mataconis, [...]

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