According to the Nov. 21 Intelligencer Journal headline “Local car dealers say it’s imperative taxpayers help industry survive.” It goes on to report “Mark Stine, of the Pennsylvania Automobile Association, said if there is no rescue now for General Motors, Ford and Chrysler, the consequences for the economy of the country are severe.”
The dealers speak out of misplaced loyalty and fear of the unknown. They have long been the victims of manufacturer ineptitude in managing the auto business and predatory practices towards dealers. Shoveling $25 billion of tax payer money into what has proven to be a bottomless hole will simply make the dealerships’ prospects all the more precarious.
On the other hand, the moment that the auto manufacturers file for Chapter 11 treatment under the bankruptcy laws, manufacturers will become fully credit worthy since new debt has priority over old. Also, this is the best way to bring all the stake holders to the table under bankruptcy court supervision to fairly share the pain; enable the manufacturers to shed a substantial portion of their heavy debt, health care, and pension obligations; to bring in better management; and to forge ahead with modernization.
The U. S. taxpayers have already granted General Motors, Ford and Chrysler a $25 billion subsidy to modernize their models. If more money is to be provided, it should only be when a far sighted and viable restructuring plan is in place.
Chapter Eleven will not lay off a single worker, will not stop production of a single car, and, although dealers may suffer tens of thousands of dollars in immediate losses from funds owed them, the manufacturer’s ‘crunch down’ will greatly enhance their future prospects and the value of the dealerships.
Editor’s note: A NewsLanc affiliate built, owned and operated four auto dealership over a period of several years.
