I have been trying to follow the effects of the Detroit failure / near-failure (I believe those are the two remaining options) this past week or so (most recent post on the matter here).
Thankfully, the New York Times has been dioing their part to try to quantify the impact the closure of thousands of automotive dealerships in the coming year or so, and the impact that will have on the income of organizations that have grown to rely on these small businesses (as I have posted on previously). The article provides a fairly broad listing of likely side-effects from the coming dealership closures, and much more information on the conditions that these dealerships will face that make them particularly vulnerable:
“With a bailout moving through Capitol Hill, “we have a chance of being hung with a softer rope,” said Mr. Fitzpatrick, chairman of the California New Car Dealers Association.
…
Virtually every state has stringent laws that make it difficult for manufacturers to alter dealer contracts, even when they abandon brands…
But this time, many analysts say the sheer scale of the economic downturn is reducing the likelihood that many dealers will fight to stay in what has become a money-losing business.
…
The economic decline among the dealers is undermining their legendary political clout. Their powerful lobbying organizations secured the franchise laws in virtually every state, which protected them from efforts to winnow their numbers in the past. Now it is possible that Congress will try to suspend or otherwise override those laws as part of a reorganization plan, something dealers have begun to lobby against.”
It seems like this was a battle of attrition. With automotive sales falling year-over-year between 30% and 40% for many of these dealership, they may no longer resist their closure much.
Though from my personal experience and some indirect anecdotal evidence, I have heard very little true suffering coming from dealer principals. I believe they tend to make out very well, at least until recently. I won’t weep too much for them. But everyone south of the GMs deserve some compassion.
… and the cow goes moo
