CORRESPONDENT OF THE DAY
State Laws Caused Auto Dealer Situation
Editor, Times-Dispatch: In his recent Commentary column, "Dealer Plan Will Kill Jobs," Donald Hall of the Virginia Automobile Dealers Association claims that the Obama administration is forcing auto dealerships to close. He is being either naIve or disingenuous. He says (incredibly): "The free market should be allowed to decide how many and which dealerships should survive."
The fact is, as I'm sure he knows, auto company executives have been trying for years to respond to the free market by closing unneeded dealerships. They were prevented by state franchising laws, which protected existing dealerships without regard to the free market. In other words, much of his constituency has historically been protected from the free market by artificial government rules.
I agree with Hall that the impact of these closings is harsh and painful, as the free market he seems so enamored of tends to be. But don't pretend that this pain is a result of government intervention. President Obama's task force is merely the last-resort catalyst for actions that the free market has been demanding for years.
Ken Wolf.
Richmond.
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Reader Reactions
Those comments sound suspiciously like they come from one who has never been through a business bankruptcy. Add in the “maybe”, “doubt”, and “guess” and we have yet another opinion based on few if any facts. Hand me that cup, because if that’s the only other option then I’m ready for another drink of the kool-aid.
Rick,
Spoken like a true Obammmmmer kool-aid drinker. If allowed to declare bankruptcy without the government help, maybe the ridiculous union packages would be gone, and the carmakers would get back to building cars instead of paying retired union workers more than they were ever worth on their best day. As for the dealerships, closing, I doubt there would be as many. How many Pontiac, Saturn, Hummer, Chrysler/Dodge dealers are there that will not have a business as a result of this “cleansing”? How many were healthy enough to make it with a weak brand? I’d venture a guess that most would have survived if they made it through the last year.
Based on the comments above, I suppose the best thing would have been for the government to stay out of the auto business all together. We would still have Chrysler and GM entering bankruptcy, but not coming out nearly as fast or as well positioned. The dealerships would still close, but there would be more closings. Obama is trying to shore up businesses that the free market no longer supports. The free market doesn’t care about a dealership’s profitability, nor shareholders’ equity stake or employees’ job seniority. If you can find a rhyme or reason for the free market’s actions at the micro-economic scale, write it up and earn your Nobel Prize.
I wonder if Mr. Wolf ever invested heavily in a franchise agreement, built a high priced very specialized building, invested in people, training, inventories, tools, and spent endless hours managing and working at a job that a total business neophyte summarily killed as part of a “restructuring” program. I doubt Mr. Wolf has ever actually done anythign except work for someone else or the government; which qualifies him at leasst as well as Obammma is qualified to fix the automobile industry. All Obammmma wanted to do was make sure his union buddies didn’t get the blame they most assuredly deserve for the failure of one of America’s business icons.
Interesting thoughts. I wonder how Mr. Wolf would go about explaining the closing of profitable dealers - which is, in fact, happening.
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