Unsure of where this recession is headed, I can’t blame
lawmakers for their involvement, but can we make sure that all sides are heard
before we jump to conclusions.
Take these consumer-protection bills Michael Benoit’s been
writing about lately. While well intentioned, these bills could render F&I
extinct while making it virtually impossible for downtrodden consumers to
repair their credit.
Listen, I think we can all agree that there’s plenty of
blame to spread around these days. Should we have counseled consumers on what
finance-appropriate means? Sure. But shouldn’t consumers be educated enough to
know how to use their credit. I just don’t buy the argument that creditors
duped consumers into those exotic loans. I knew they were wrong for me when I
applied for my home loan.
My point is government needs to take a step back and make
sure its decisions aren’t made in a vacuum, or that lawmakers aren’t using this
situation to grandstand in front of their constituents. Take this June 2
hearing proposed by the Senate Commerce Committee, which wants the CEOs of
Chrysler and General Motors to explain the impacts of their recent actions.
What is there to gain by doing that?
Shoot, Chrysler’s dealer cuts were made under the guise of
bankruptcy, so what exactly does it have to explain? And if the question is how
Chrysler intends to honor warranties, or redistribute parts and the 44,000
vehicles on the lots of those 789 cut dealers, I’ll send you my notes from
Chrysler’s May 14 conference call. Heck, even the Chrysler Dealer Council isn’t
balking at the automaker’s moves.
As for GM, there’s little doubt it’s headed for bankruptcy
after its failed attempt at a debt-for-equity swap with bondholders in May. And
the company’s been more than clear about not renewing the franchise agreements
of 1,124 “underperforming” dealerships come October 2010. And it was clear the
phasing out or sale of Saturn, Hummer, Saab and
Pontiac would result in another 505 dealer
cuts.
I agree with the argument that dealers are of no expense to
these troubled automakers, but the fact is these companies have been trying to
shed dealers for years. Chrysler attempted to do so with its Project Alpha in
2004, and is trying to do so again with its newest revival strategy, dubbed
Project Genesis. Unfortunately, neither program has resulted in major cuts,
which is why Chrysler chiefs Jim Press and Steve Landry heralded the chance do
so under bankruptcy as a “once in a lifetime opportunity.”
“None of us want to eliminate dealers. These are longtime
partners of the company,” they said. Bottom line, there just isn’t enough
industry right now, which is why Chrysler is sacrificing 14 percent of its
volume so the remaining 86 percent flourish.
But don’t get me wrong, it bothered me when the Chrysler
execs said profitability and capital weren’t deciding factors in which dealers
would remain, especially after learning that one of the dealers on Chrysler’s
40-page hit list employed one of my key contacts. Her name is Julie Horns, one
of the most respected F&I managers on our Website’s forum.
Her Continental Chrysler Jeep store, which was set to
celebrate its 55th anniversary on May 28, lost out to a Dodge dealership that
opened up across the street last year. “How we didn’t meet the facility
requirement is beyond me,” Horns said. “I have been taking calls from customers
who are beside themselves about the possibility of not being able to service
their vehicles here. It’s very sad. We love our customers here at Continental
and that love for us was clearly shown by all the calls and e-mails we
received.”
Initially, Horns said her dealership would fight Chrysler’s
decision. That changed four days later, as she informed me that the dealership
was working with the city of Countryside, Ill., to amend an
ordinance that prohibited independent used-car dealerships from operating
there.
“… With four Continental stores in town, all well run, all
with clean updated state of the art facilities, and having lost three dealers
in the past year and all their associated tax revenues, they may be willing to
make an exception,” she wrote in an e-mail.
Yes, it’s difficult to swallow Chrysler’s and GM’s cuts, but
what exactly will another hearing accomplish. It’s time to move on. Horns has,
and so has the soon-to-be “Continental Used Car Superstore … Home of New-Car
Satisfaction at a Used-Car Price.” And Lord knows there are plenty of used cars
to sell.