Can auto dealers do anything to fight back against the mass closings ordered by General Motors Corp. and Chrysler Group LLC, and the changes being required of those dealers who are retaining their franchises?
Not a whole lot, according to National Automobile Dealer's Association chairman John McEleney,
speaking on CNBC on June 3 before testifying to Congress later that day. While he said he was going to push for transparency and resist what he thinks is overreach by GM with its continuing dealers, he also acknowledged the primacy of bankruptcy law in the restructurings.
So what to make of H.R. 2743, the Automobile Dealer Economic Rights Restoration Act, and its Senate counterpart, S 1304? Or of the fact that NADA president Phil Brady
backs the legislation? Or of the
Committee to Restore Dealer Rights, launched on June 19? If nothing else, it seems to require a fair amount of time and money on someone's part.
There's no question the dealers are suffering. Attorney Steven Levitt, who works with dealers as co-chair of the auto group at Fox Rothschild LLP in Princeton N.J., provided a couple of examples (albeit without naming his clients) in a recent interview.
Levitt describes a continuing Chrysler dealer who's unhappy with what he is being asked to do to bring all three of the company's brands under one roof. The client owns a Chrysler-Jeep dealership in one town and a Dodge dealership in another. His preferred solution would be to merge the two, but according to Levitt, Chrysler wants him to sell his own Dodge dealership and merge with a different one that's across the street from his Chrysler-Jeep showroom.
And since many dealerships are family businesses, Levitt says, the turmoil is also upending estate plans that were laid in better times. A dealer closing may well result in real estate getting dumped on the market, which can be bad news for the younger generation. "Real estate was viewed as an appreciating asset, so it's often owned by the kids," he says.
Multiply these complications by the hundreds -- and throw in some little league teams without sponsors -- and you understand the stream of newspaper articles about dealer hardships and the eagerness of politicians to at least appear to be doing something.
What it will all amount to is another matter. The guess here is, not much. -
Kenneth Klee
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When the Supreme Court let the sham that was the Chrysler bankruptcy go through, it became pretty clear what side of the bread the butter was on. Precedent and law be-dammed, it’s going to go the way the administration wants it to go.
The fix is in and the dealers are the fall guys.