Auto Shipping Blog

For many individuals in the auto dealer industry, business has been looking grim for the past few months. Recently, General Motors and Chrysler have been closing dealers, and relinquishing their franchise agreements. Last month alone, Chrysler closed almost eight hundred dealerships, roughly one-quarter of their dealerships. These cuts place thousands of people without work. When examining similar actions by G.M. we find them looking to deny over 1,000 dealerships an opportunity to renew their franchise agreements, once they expire in 2010. It would appear as though many dealerships are on the chopping block, so to speak.

Things began to look up for these troubled dealerships on this past Thursday, when the House approved a bill known as The appropriations bill. This bill contains provisions which mandate the renewal of these franchise agreements by Chrysler and G.M.. This bill, which passed on a vote of 219 – 208, was advocated by the White House, however the specific provision regarding the auto dealerships was frowned upon due to the notion that “it would set a dangerous precedent”.

As far as support in the House goes, these dealerships have been enjoying bipartisan support, although not all who support this specific problem voted in favor of the bill being passed. The reason for this is due to some of the other provisions mentioned in the bill. Chrysler and G.M. are both partially owned by the government; Chrysler at eight percent and G.M. at approximately sixty-one percent. The Obama auto-task force argues that these cuts were “a critical part of their overall restructure.” They also argued that these dealerships were “inefficient”, adding that those dealerships who weren’t profitable were “financial drains.” The Obama auto-task force, Chrysler and G.M. all felt as these companies evolve they’ll need fewer dealers.

On the flip side, the affected dealerships and their supporters argue that they are in no way a burden to the industry, pointing out that “franchises pay for vehicles,parts, and even the right to hang the manufacturer’s sign.” They invest an ample amount of time and money in both product and real estate, for the big-time auto companies to shut them down would be devastating. Overall, this battle is certainly not nearing its end, and as time progresses there will undoubtedly be change – for better or worse depending on whose side you’re in support of. This is only a portion of what the newly passed appropriations bill deals with.