He used an example of a Stow, Ohio, dealership whose new car sales were up 57% in 2009 (prior to cash for clunkers) despite a 40% decline in the national market - and wondered why this businessman could get no explanation for the decision to close him down.
And then I remembered an Automotive News editorial I read (opinion piece of 8-24-09, subscription may be required) that talked about General Motors and Chrysler taking applications for new distribution points:
"During bankruptcy, each automaker described the need to build a rational distribution system by closing some dealerships and shifting franchises, and the bankruptcy judge agreed.
But if what was achieved in Madison, Wis., is an example of Chrysler's new strategic distribution plan, there was too much suffering for too little gain.
In Madison, Chrysler fired the east-side dealer and the west-side dealer. Then the automaker hired the west-side dealer to be the east-side dealer and the east-side dealer to be the west-side dealer. The company handed out additional franchises so each dealership will sell Dodge, Chrysler and Jeep.
And what did Chrysler accomplish? It lost sales for several weeks and disrupted two profitable businesses.
In hindsight, Chrysler's precipitous rejection of 789 dealerships looks ill-advised, ill-planned and poorly executed. It still is not clear what standards were used to determine which dealerships to reject. But the process appears random and arbitrary. And there are still rejected dealerships that are stuck with unsold inventory that is difficult to unload.
Those were cruel moves, even if necessary. And Chrysler has yet to prove the necessity of closing all those dealerships, even though the cruelty is evident."
I guess I don't get it. If they need new distribution points, could some of the existing dealerships have been relocated or moved instead of shut down? Will they look for another dealership in Stow and, if so, what kind of loyalty will those area customers have if they lost the oldest Chevy dealer in the county, costing 80 jobs, only to have another open shortly thereafter?
If new dealerships open where old ones were closed without justifiable reasons, people will be more inclined to agree with Kennedy's conclusion:
"To their shame, the media has let this story go, even though there's good chance there's a Watergate buried in it somewhere. Killing the successful auto dealers, while sparing the less successful, is most likely a political rather than equitable or rational decision."