Topic: CNSNews.com
A Nov. 19 CNSNews.com article by Dan Joseph uncritically repeats a claim by House Minority Leader John Boehner regarding "the government’s reaction to General Motors and the bailout from the government" that "we’re talking about tens of thousands of Americans who were punished as a result of the government’s action." Joseph went on to quote a Boehner spokesman saying that Boehner was talking about "both the bondholders and the employees at the dealerships that were arbitrarily closed by the White House."
But fewer GM dealers have closed than originally announced, and many of those that did close were connected to brands that GM discontinued, while others merely lost the ability to sell certain GM brands while continuing to sell others.
Edmunds.com reports that effective Nov. 1, GM has a network of about 4,500 dealers, compared with 6,049 dealerships in June 2009. This represents four brand combinations in 15 brand combinations, compared to the previous setup that represented eight brands via 87 brand combinations.
Edmunds also reported that "GM recently reinstated many dealerships that were previously notified of franchise agreement terminations. On March 8, 2010, GM contacted 661 dealerships to negotiate terms of retaining the franchises. Other dealers contested the franchise agreement terminations through an arbitration process that ended on August 5, 2010." And the final closure list includes dealers of the discontinued Hummer and Pontiac brands.
Boehner's complaint about "dealerships that were arbitrarily closed" is a misnomer on two fronts. First, GM did not and cannot close dealerships -- it grants franchises to sell its cars, and what it did was seek to cancel or decline to renew franchises with individual dealers, which may or may not result in the closing of the dealer. That dealer also has the option of trying to obtain another new-car franchise, or to sell only used cars.
Second, GM and Chrysler did not act in an arbitrary manner in withdrawing franchises. As The Truth About Cars writes:
Over at GM, the problem is more complicated given that the Pontiac brand is being eliminated after GM’s recent efforts to build its Buick-GMC-Pontiac sales channel, and that GM is in the process of selling its Hummer, Saturn, and Saab brands. GM dealers will be evaluated based on four criteria to judge their viability. These criteria include:
Profitability
Capitalization
Customer service
Sales effectiveness.
To be part of the new, post-bankruptcy GM, these dealers have to perform well in all four categories.
For those dealers being eliminated, GM is offering some dealerships from $20,000 to $1 million to wind down their businesses over the next 17 months, the payment based on factors such as brands carried, regional sales rank, and current inventory.
That's hardly arbitrary. But Joseph didn't see fit to question a Republican making such a claim, which presumably is CNS editorial policy.
