Who decided which Chrysler dealers to close?

May 28, 2009

Washington is always full of conspiracy theories —  one of the latest surrounds the decision to close hundreds of Chrysler dealerships following the automaker’s slide into bankruptcy.

Conservatives want to know whether dealerships with Republican ties were targeted by the Obama administration.

CHRYSLER/BANKRUPTCYSome are seizing on a Reuters article. In it, a lawyer who represents some of the terminated dealers said after a deposition with Chrysler President Jim Press that the automaker did not make the decision.

“It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers,” said lawyer Leonard Bellavia. “It really wasn’t Chrysler’s decision. They are under enormous pressure from the president’s automotive task force.”

But there’s more.
Conservative blogger Doug Ross said he discovered that most of the dealerships to be shuttered had given campaign funds almost exclusively to Republicans and very little to Democrats.

However, as with all conspiracy theories, there is the denial, both from Chrysler and the Obama administration.

Chrysler said in the Reuters article that it made the decisions based on location, customer satisfaction and sales potential. The company also noted that almost half of the targeted dealerships sell other brands of cars and most rely on used vehicle sales for their business.

The White House denied suggestions that the Autos Task Force was involved in deciding which dealerships would be closed and expanded that denial to include production plants.

“The president’s task force on autos did not pick individual dealerships,” White House spokesman Robert Gibbs said during Thursday’s daily briefing in Washington. “It isn’t involved in picking what plants may or may not be closed.”

Asked if there was any concern about the possibility of politics tainting the decisions, Gibbs issued a broad denial.

“Let me reiterate that we don’t make those decisions,” he said. “Chrysler makes those decisions. So I’m sure you can send Chrysler the address of the blog that you refer to.”

For more Reuters political news, click here.

– Photo credit: Reuters/Jason Reed (A Chrysler/Dodge/Jeep dealership in suburban Washington, D.C.)


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No one wants to admit that many high-volume dealers who sell all the Chrysler products and have 5-Star service departments are on the rejection list. This is a flawed decision that will further reduce sales for a long time and provide no tangible cost reduction to Chrysler. As for the “too many dealership” rant, Toyota also is losing money. The free market should determine which dealerships stay open.

Posted by Charles | Report as abusive

This is a largely libertarian originated story. Conservatives have been a bit late coming to it, and frankly, a number of top conservatives such as Michelle Malkin and even Jonah Goldberg have been rather skeptical.

But of course, for the liberal media to portray this as a Libertarian vs. Obama deal, wouldn’t quite fit the template.

While we Libertarians are thankful to have Conservative support on this, in many ways they’re actually hurting the effort, by giving the media an excuse to paint this as a partisan “Conservative” vs. Obama effort. It is not.

This is firmly Individualism of the LIBERTARIAN! variety versus the Authoritarianism of Obama.

Posted by Eric Dondero | Report as abusive

Bill Clinton was right when he called Obama a “typical Chicago thug”. These are thug tactics. If these dealerships paid their bills, sold the cars in good faith, why cancel them. The Obama Admin has displayed thuggish behavior from the start. You can take the politician out of Chicago, but you can’t take the Chicago out of the politician.

Posted by Brad | Report as abusive

Lies, lies, lies. “Chrysler said in the Reuters article that it made the decisions based on location, customer satisfaction and sales potential. The company also noted that almost half of the targeted dealerships sell other brands of cars and most rely on used vehicle sales for their business.”

I know for a fact that there were a number of those dealerships that were on financial hold with Chrysler for a majority of 2008… how can they sell cars when Chrysler won’t let them??? Then to turn around try to say that it’s because they didn’t make up a large enough percentage in the sales volume of 2008, come on Landry??? Not to mention all the dealers that were selling Chrysler, Dodge and Jeep and sell no other brands? What about the ones that had 100% sales satisfaction when Chrysler allowed them to sell??? WHY DID THEY GET TERMINATED!?

Posted by JT | Report as abusive

I hope there are still investigavtive journalists who
will get to the bottom of this story and give us the truth. Where are the Mike Wallaces of this generation?

Posted by Henry | Report as abusive

John Cole at Balloon Juice on this topic:

“I’ll just note that the same people now screaming about this were, just a few weeks ago, screaming about the sanctity of contracts trying to make sure that the bondholders would get their way and push Chrysler into bankruptcy and be liquidated and cause EVERY single Chrysler dealership across the country to close. But it would hurt the UAW, so then it was ok.”

Just another phantom dust-up from our wayward conservative friends. Can’t blame ’em — right now, they’ve got nothing else.

Posted by jvill | Report as abusive

Oh, no! Most of the Chryler dealerships closed were owned by Republicans!

Speaking only from personal experience, I’ve worked for six dealerships over the last thirty-some years. The owners of five of the dealerships were openly Republican. I’m pretty sure the owner of the sixth was also Republican, but he was nice enough not to make it an issue.

Depending on which numbers you use, about 90% of the money donated by auto dealers goes to Republicans (and my personal opinion is that a lot of the remaining 10% is ‘covering their bets’). There are a few Democratic dealers out there, but they are quite scarce.

There are too many dealerships for the domestic brands. Ford, GM, and Chrysler have been looking for ways to cut down the numbers for years, but the franchise agreements are tough to override. Bankruptcy allows the parent brand to start from scratch and align the dealer locations with corporate preferences. In the process, some good dealerships will close, but the long-term overall health of the dealer network will improve. As a dealership employee, I’d like to see all of my friends keep their jobs, but I also understand the business side of it.

The White House has had nothing to do with picking which dealerships close, a fact that Reuters is nice enough to actually put in the article (something many other outlets don’t bother with), but which is ignored by the fevered conspiricists anyway.

Just a few weeks ago the GOP leadership was willing to shut down every Chrysler and GM dealer in the country. Now they’re pretending like they give a rat’s tail. Amazingly, some people are still buying what they’re selling (21% and dropping).

Posted by jimmadison | Report as abusive

The USA gov. own them twice over, Crystler that is.
I would think they could decide who stays and who doesnt considering they (we) own the company!!!!

Posted by bruce | Report as abusive

Texas Thuggery, Chicago Thuggery, there are subtle differences but we’re really splitting hairs at this point ; BRAD

Posted by bruce | Report as abusive

The criteria to close dealerships in the Chicago metro market was based in corruption and the abuse of power. It was pay back time for dealers that might have not played ball with the local dealer placement managers at Chrysler.

One example; They closed a beautiful Chrysler Jeep facility in Countryside, Illinois and retained a Dodge dealer who just moved into a rented shabby building directly accross the street. This Dodge dealer also sells Suzuki brand vehicles on the same lot. In fact this Dodge dealer fit all the criteria that Chrysler said they used when deciding to close dealerships and The Chrysler Jeep store sold more cars, had excellent customer retention and satisfaction and an 8 year old modern facility.

Oh, did I forget to mention that the Dodge dealership owner is the chairman of the Chicago Automobile Trade Association.

Posted by John Ficaro | Report as abusive