It's been pointed out that the individual dealerships cost auto manufacturers nothing. Since manufacturers sell only to dealerships, killing dealerships is like turning away customers. Plus, "redundant" dealerships account for much of the flexibility in new car pricing -- dealers are more willing to negotiate when they know you can buy an identical vehicle at another dealership. Closing dealerships will reduce competition and increase car prices.
It isn't clear why Chrysler would choose to downsize its dealer network. But, seeing that the government is now heavily influencing these decisions, arbitrarily terminating dealer contracts may amount to a taking of property.
And it may not be so arbitrary: I wonder if anybody's looking into the selection process, to see if politics guided the selection of dealers whose contracts will not be renewed. It will be interesting to see how it plays out in court, assuming that some of the dealers will band together to challenge this.
To answer your question of political motivation by the 'Bama...you bet your @ss...
http://atlasshrugs2000.typepad.com/atlas_shrugs/2009/05/obama-closed-and-stole-republican-car-dealerships.html
Posted by: Rich in NJ | 05/26/2009 at 12:59 PM
See this link for some research in partisan ties of closing dealers vs. non-closing dealers.
http://directorblue.blogspot.com/2009/05/red-alert-did-campaign-contributions.html
Posted by: Greg | 05/26/2009 at 03:42 PM