Fewer Dealer Cuts For GM and Chrysler

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Look, it’s even more good news out of Detroit. What with Ford actually making a profit, it looks like all the doom and gloom about the number of dealers set to be shuttered might have been estimated on the high side.

At least that’s the case if you believe David Cole, who is Chairman of the nonprofit Center for Automotive Research. Cole told federal investigators that he thought General Motor’s and Chrysler’s projected dealership cuts will reduce market share in small to mid-sized markets. Cole summed it up by saying, “These cuts didn’t make any sense to me.”

David Cole cautioned the investigators that he has no research expertise or experience working directly with dealerships, and that he was asked to come speak only after he sent a letter to the Obama administration’s auto task force earlier this month stating his case for fewer dealership terminations. Although Chairman Cole did agree that terminations in larger metropolitan areas were in fact justified, he made the case that the automakers would be harming their historical stronghold in rural areas as well as modest-sized markets with many of the planned dealership terminations.

“The dealer is the face of the manufacturer to the average customer,” Cole said in a letter to the chief of the auto task force, Ron Bloom. Cole later said to investigators that , “By pulling out, GM and Chrysler are giving a beachhead to Ford and some of the imports.” And then Cole added, “I would suggest that the distribution network for these manufacturers be revisited by the automotive task force.”

Currently Chrysler has closed 789 dealerships, and GM plans to cut 1,350 dealerships from its ranks. These closures represent roughly 25% of a given manufacturer’s dealership network.

Whether Cole’s number and idea does pan out is one thing, and whether the Obama administration acts on them is another thing entirely.

Source: Left Lane News

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