Flight of the Wild Jeeps

[ccommack]

Chrysler is starting the job of taking a chainsword to the bloated Detroit Three auto dealership networks, revoking the franchises of 789 dealers. This is where the End of the Automaking World As We Know It starts reaching out from Michigan and Ohio and really starts going nationwide (except Alaska, but they don't count). GM is following suit and

Comments

[mst3kforall]

I heard on a local news report that Chrysler has been "buying back" cars from customers and bouncing the payment checks... Perhaps this type of policy might explain the salesman from whom I bought my (used) car two years ago having recently called me out of the blue from a Chrysler number (even though my car was not a Chrysler)

[ccommack]

The Evil Corporate Genius bit is this: "Chrysler, because it is under Bankruptcy Court protection, will not be required to buy back vehicles, tools or parts from rejected dealers." And the dealers cannot sell a new Chrysler vehicle after June 9, on penalty of legal WAAAAAAAGH! And, like most businesses, the dealers' current inventory was not bought with cash.

Most of these dealers were on the phone with bankruptcy lawyers today, trying to see if there's any way to salvage the business or if they should just raise the white flag now.

[orawnzva]

Wait, so a large number of actual cars that have already been built become unplayable misery burden? What the hell?

[ccommack]

Glad to see that point came through, and I'm stealing your phrasing for the update.

No, there is approximately no universe in which this is a just outcome for the dealers.

[sildra]

Ford bought and then shut down a whole ton of dealerships a year or two ago. But I guess in that case, the (then) current owners got money for it. Still, my parents were really annoyed, because they liked one of the local dealerships as a place to take their Fords for repairs, and that one got shut down for being too far from a freeway, leaving only the one run by an Israeli that my parents would never set foot in.

wait... what?

[rose_garden]

leaving only the one run by an Israeli that my parents would never set foot in.

For a specific reason or just because it's run by an Israeli?

Re: wait... what?

[sildra]

Umm, both, which are the same. As soon as you step through the doors you can feel your money being drained away by unnecessary repairs that you'll be overcharged for. Which, my parents feel embarrassed for even trying to do business with the place once--of course that would happen. That my father's older brother is an actual conman (the kind that has his wages garnished in perpetuity to pay back his victims, not the kind that goes to jail--he managed to get just a little bit of sympathy from the jury by claiming he'd been duped too, so only his business partner went to jail) only puts him, like, one standard deviation away from the mean for Israeli business scruples. He's just bad at it and got caught. As my father says, it's a cultural thing--if you'd lived in Israel for a while you'd expect this sort of thing and (hopefully) be adept at avoiding or negotiating your way around it--but if you're used to American business practices, Israeli businesses are going to look pretty dishonest.

Re: wait... what?

[ccommack]

In other words, a stereotypical American used car salesman...

[q10]

how many people does the average dealership employ? under pre-crisis circumstances, about how many vehicles per dealership were in inventory at a given time, and how many were sold per year?

i feel like hearing ‘n dealerships’ tells me very little about the real impact, and having even basic numbers like this would let me begin to establish a sense of scale.

[ccommack]

From the link: "The National Automotive Dealers Association (NADA) reckons each Chrysler dealership employs about 48 people. Using that formula, they estimate today’s ChyrCo dealer cull will throw 37,872 people out of work."

That may not even include the real targets here, the large corporate structures in place inside Chrysler to manage their relationship with these ~800 dealers.

No word yet on how much inventory is now distressed.

[think_too_much]

NADA... that is somehow brilliantly apropos.

[ccommack]

So, this is not terribly different from other mass-layoff events, except that this is very evenly distributed geographically. This would then be superior to an equivalently-sized set of factory closings, or would be in better conditions (now, because the job market is so bad, it's a case of unemployent is unemployment). The countervailing factor there is that dealerships are, by definition, located in low employment density areas, so even workers who can find new jobs are looking at major life disruption. There are other aggravating factors like dealerships tending to be family enterprises, as well.

[carnap]

A lot of houses are becoming unplayable misery burden too. Developers are actually destroying new unsold houses because the expenses of maintaining them and the fines for failing to maintain them exceed the option value of the houses.

[ccommack]

Er, are you thinking of my immediately previous post?

[appending_doom]

I forget - did we give them a shitload of money to stay in business?