What They Won’t Tell You About The Auto Dealerships

I believe that the Detroit bailout negotiations are due to start again this week. I thought I would try and give you a little background on some of the issues that might not be quite as clear as the press or the politicians should make them.

Consider for example this article from the New York Times which would seem to indicate that Mom, apple pie and the flag are all likely to disappear if we lose local auto dealers. Seldom have I seen a car dealer raised to such heights. It’s a tribute to the author’s ability to put on blinders and write a human interest story as instructed.

Now we all have our favorite story about car shopping and I promise not to tell you mine if you don’t tell me yours. Suffice it to say, that if you hold the independent dealers in the same sort of esteem as I, it is probably as hard for you to conjure up much sympathy. Just to validate your skepticism let me refer you to an old article from the New Yorker.

It does a fine job of detailing the mess that the dealerships and Detroit placed themselves in as each sought to ensure a competition free environment. In a few short paragraphs it perfectly sums up the anti-competitive nature of the state franchise laws that prevent Detroit from cutting product lines and rationalizing their distribution network.

You are unlikely to hear any of your elected representatives discussing this over the next few days. As unindicted co-conspirators they would just as soon that you weren’t aware of all of this. If perchance, a little money (little by Washington standards these days is anything under $10 billion) creeps into the inevitable bailout plan to ease the pain of those local dealers you might want to call your congressman. Remind him that they set themselves up for this.

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