Inspector General Criticizes Treasury's Role In GM, Chryslsr Dealer Closures

A government watchdog is criticizing the Treasury Department for urging General Motors and Chrysler to quickly reduce the size of their dealership networks -- a move that cost jobs during the recession.

The special inspector general for the government's bailout program says the Treasury didn't do enough to make sure that speeding up those closings was necessary for the companies' long-term health.

"At a time when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs, Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls -- all based on a theory and without sufficient consideration of the decisions' broader economic impact," the report states.

"In response to the [Treasury Department] Auto Team's rejection of their restructuring plans and in light of their intervening bankruptcies, GM and Chrysler significantly accelerated their dealership termination timetables, with Chrysler terminating 789 dealerships by June 10, 2009, and GM announcing plans to wind down 1,454 dealerships by October 2010."

"Job losses at terminated dealerships were apparently not a substantial factor in the [Treasury Department] Auto Team's consideration of the dealership termination issue."

Read the full report:

SIGTARP Report on Auto Bailout

Comments

[cartunes]

01:41 PM on 07/19/2010

Why ???? The Unions are happy !!!!!!! LAMO

[mrspiffy]

11:49 AM on 07/19/2010

There were too many of them. Just like too many Applebee's..Linens and Things...Circuit City..typical American style overbuilding.
http://yieldpig.blogspot.com/

[sparky73]

11:32 AM on 07/19/2010

what the heck do they know? Obama made the right move with the auto industry

[Blue in South Jersey]

08:57 AM on 07/19/2010

Okay, this is going to probably sound stupid, but I just have to say it. Ford didn't take bailouts. They are ahead of GM and their Chevrolet Volt.
I have always had a Pontiac Firebird. Now I will have to buy used cars for the rest of my life if I ever wanted another one.
Every time I see a Mustang, it bothers me. If you actually had money today, you could go out and get a new one.
Growl, snivel.

[BuckSatan]

09:30 AM on 07/19/2010

I owned an 84 TransAm and an 89 Camaro RS, and can't figure out why you would ever want one anyway. Just switch to the Mustang and you may finally know true driving hapiness.

[RockyMissouri]

09:38 AM on 07/19/2010

My husband and I have always bought used cars--Fords-Chevy-Pontiac. My favorite was a Malibu ----it was mine, and it was a hot little car..reliable, too. My daughter said old people shouldn't have hot cars, young people should have hot cars, young people....like her..! Ha!

[Blue in South Jersey]

08:50 AM on 07/19/2010

And I have to add about jobs in this case-with the dealerships that are/were staying open, couldn't they absorb some of the terminated employees since they would essentially be a larger dealership?

[Blue in South Jersey]

08:47 AM on 07/19/2010

Even though a lot of people are going to be or have already lost their jobs because of the dealership closings which were made on a corporate level, one has to think of the overabundance of dealerships that are/were out in the world. You could have two GM dealerships in the same town, selling the same brand. You could have a GM dealership in one town that sold one brand only and two towns over there was a dealership that sold five brands, including the one that the above dealer sold.
This is/was counterproductive-I know where there are dealers that closed, went out of business because they couldn't compete with each other. Isn't this practice all-in-all counterproductive to GM?
This is something to think about.

[sticky29]

09:39 AM on 07/19/2010

Were the dealers profitable? Could two dealers in the same town survive? Seems to me having the govt determine this goes against everything this country is all about.

[Chris]

10:17 AM on 07/19/2010

The only test shoudl be if the dealer was profitable and if it woudl be viable goign foward as part of the restructed company. Meaning if ythe dealer only sold Saab or Hummer then it shoudl have been shut down sicne those liens were being sold/shuttered.

[catfish2000]

07:43 AM on 07/19/2010

This is what happens with people that have no idea what it takes to run a business and then try and run a business.

[sticky29]

09:40 AM on 07/19/2010

So let's let the govt run this business. The govt can barely run the govt.

[atlanta ed]

06:00 AM on 07/19/2010

Come this was a bailout for unions. Dealerships and their employees are not union. The Big O's goal was to do what unions wanted.

[wigglwagon]

07:48 AM on 07/19/2010

They're not? Maybe in Atlanta, they're not. Union membership is only about 7% of the workforce. Thinking that is the major influence in a major national economic strategy just doesn't sound quite right.

[mrcontinental]

05:02 AM on 07/19/2010

And allowing both companies to go belly-up would have saved how many dealerships and jobs?

It's best to no even try to make sense of drivel like this.

[setharoth]

04:43 AM on 07/19/2010

Because of your dealership is terminated you caused thousands of unemployed.

[sarabono]

01:17 AM on 07/19/2010

It still is a puzzlement to me how it was decided which dealers to let go. Holler & Classic Chevrolet was the most successful Chev Dealer in Orlando. The Holler family had been a Chevy Dealer for over 50 years. In fact, Roger Holler Sr. was one of the people that set up the original Dealership Training Program for GM. Then all of a sudden, the multiple store Chevy Franchise was cancelled. Now, if I want to buy a Chev. I have to travel 18 miles to a Chevy Dealership near Orlando International Airport which is a true pain. On top of that, this is a marginal dealership not known for good customer service.

Since loosing Chevy, Holler has expanded there Honda Franchise to one of the former Chevy stores, in another store front have started selling almost new used cars of various makes, and in a third store they have substantially expanded there Hyundai Franchise.

I have lived in Orlando for 25 years. The Holler Dealerships (Olds & Chevy) have provided me excellent service. In my case, I will buy my next car from Holler and it looks like it will be a Honda or Hyundai.

[wigglwagon]

07:53 AM on 07/19/2010

It is still a puzzlement to me how closing dealerships increases profits for the manufacturer.

[Low Prices are Good]

12:05 AM on 07/19/2010

government failure after government failure still doesn't register with the liberal trolls. They think they have representation with their one vote. Hilar.

[Fotios]

12:16 AM on 07/19/2010

Chrysler would have gone under if the Govt. didn't step in. I wouldn't care if Chrysler did go under, but how many jobs would have been lost if the company was no more?

[Low Prices are Good]

01:12 AM on 07/19/2010

well, if you're all about sticking people into unproductive work just for the sake of performing work, lets pay people to dig holes and fill them back up. There's a reason why companies go bankrupt - it's because they aren't using resources efficiently. It is a sign from the market that resources could be employed elsewhere to satify consumer desires more effectivly.

Or in today's world, a company may go bankrupt because government is an unfair competitor or it raises regulations so high that the company has little flexibility to stay sustainable.

[gmundenat]

01:39 AM on 07/19/2010

They should have been gone the first time they went belly up. Saving Chrysler was enormously destructive because it sent the message to GM: If a little fish like Chrysler will be bailed out, then we at GM can screw up forever with no fear. They certainly have behaved like they got that message.

[JePense]

11:36 PM on 07/18/2010

It said on page 14 of the local paper that the dealerships needed to be closed to reduce competition. It did. But that's just the kind of thing that the antitrust efforts intended to avoid - predatory practices that reduced competition.

Our nearby Chrysler dealership was a thriving enterprise with an excellent service department. We got a letter from Chrystler after that dealership was shut down directing us to the dealership 25 miles away -- as if the Archbishop had assigned us to a new parish! But we would have to drive past dozens of other non-Chrysler dealerships to get get there, and why would we? Go that far, that is?

[Trustandalwaysverify]

10:31 PM on 07/18/2010

The more we find details of Obama's policies, the more we "discover" his policies are not good.

[sticky29]

09:44 AM on 07/19/2010

Dictator.

[RockyMissouri]

09:48 AM on 07/19/2010

Republican, are you.....?

[Riverman]

09:36 PM on 07/18/2010

I was a working mechanic and the loss of jobs in my industry has really hurt but I could not disagree with this report more. Both GM and Chrysler were destroyed by decades of incompetent and parasitic management. Without the actions taken by the government they would have collapsed completely resulting in vastly more job losses and general economic disruption. As much as we might want to we really can't have our cake and eat it too. Of course the republicans will tell you that those awful working people killed their companies by insisting on high levels of compensation. In that case the more of those awful workers lost their jobs the better right? I have great respect for the virtues of education but it sure does seem to be wasted on business majors in this country.

[chaz]

10:20 PM on 07/18/2010

" I have great respect for the virtues of education but it sure does seem to be wasted on business majors in this country"

I think you mean the Republican controlled national MEDIA.

Fox,far right wing radio,etc.

[2warvet]

07:24 AM on 07/19/2010

So the unions had nothing to do with the decades of poor management? They never took advantage of incompetence? Really? I can agree that management was poor in these companies, but I think you are giving a pass to the auto workers union.

[splashca]

08:08 AM on 07/19/2010

I sat next to a guy on a plane that worked at Ford for 18 years and we talked about the Unions. He stumped me when I found out his assembly line job pays him over $75 an hour to fill radiators. The car comes down the line and he sticks a hose in the radiator and pulls it out before it overflows and then sticks it in the next car. He laughed and laughed as he was headed on vacation about how they had Ford bent over a barrel!