The Big Obama Administration Thread

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Then are they really objective? I think both Drew and martaug have valid points. Closing the rural auto dealers will have a more detrimental impact on the country than closing a few big city dealers. I pass five different GM dealers on my way to work -- another four are within two miles of my route. Closing a few of those down would not really impact this area much (except the jobs in the highly democratic district). Closing down the Chevrolet dealers which service the farming community just outside Chicago could have a huge impact on individual farmers (predominantly republican).

Obama and his staff know the make up of rural America and they know they can win re-election without it. However, in the suburbs where he won with a slight margin or lost by a slight margin could be the make or break in the next election -- especially if enough people lost jobs due to his policies.

I don't know if this was partisan or not, but there is certainly the possibility it was. I think Obama and GM need to show why it was not.

 

Do you really think that Obama would be so dumb to do something this partizan when everyone knows the US auto industry restructuring was going to be covered ad naseum by every major news outlet? The mis-steps Obama has made have largely been outside of his control (Rev Wright springs immediately to mind). This wasn't, and I still say it is Chrysler management that made the decision, not the Obama adminstration.

@T2Bruno - I do think they are objective in that it makes good business sense to keep the car delearships that sell the most cars (i.e., the ones in major markets) open preferentially. The ones that sell the most cars would tend to be the most profitable ones.

And why would closing a car delearship in a rural community have a huge negative impact on rural farmers? Because they have to drive further once every few years to buy a pickup? It's not like going grocery shopping when they would be inconvenieced on a weekly basis. I imgaine farmers are a lot like most other people, they buy a car every few years. They aren't closing mechanic shops - they'll still be able to get their vehicles serviced locally...

Also, I would think that most car delearships that serve major markets ARE in the suburbs outside to city. I can't think of one car delearship in downtown Baltimore - they are all in the suburbs. Car delearships have pretty large footprints, and it's unrealistic to think they are going to be in center city metropolitan areas. Due to their large size it's far more affordable to build your car delearship in Baltimore County, as opposed to Baltimore city.

 

Aldeth, you do not take a new vehicle to a local repair shop for servicing. That is generally done at the dealer until the vehicle is out of warranty. Also, the rural dealers typically have a few cars in stock and generally order the car for delivery -- there is not a huge cost associated with inventory. Rural dealers tend to operate more lean than city dealers as the customer base is much different (rural customers know the dealer needs to order the vehicle and is generally willing to wait). The suburb dealer needs to have a huge stock (which is usually supplimented by loans from the manufacturer) to meet the immediate demands of the customer walking in off the street who want to drive home with the vehicle.

In essence, the suburb dealers are the ones that have the most debt, are the least cost effective, and should be where most of the closures come from.

 

Is this true, has this been covered by the major news outlets. I thought this was only being covered by the blogs and Fox News.

 

T2,

I'm willing to concede that most of the service will be provided by a delearship when the vehicle is under warranty. Still, a typical vehicle only needs servicing once every couple of months, so it shouldn't be too terrible. I drive about 30,000 miles per year, and even I don't have to go in more than every couple of months.

I'm not sure I agree with your comment on delearships. Sure, a large delearship will take out a bigger loan to purchase the cars on their lot, but they also sell a lot more cars. Economics tell us that the more items you sell the smaller profit margin you need to earn on each individual item for a business to be profitable. Rural delearships in which a vehicle needs to be special ordered and individually driven to the delearship would seem to greatly increase overhead costs at those delearships (which is why they probably have fewer vehicles in their showrooms). A farmer would probably get a better deal driving into the city to buy his special order truck, and getting it serviced at the local delearship.

Fox isn't considered a major news outlet? I thought Fox News was the most watched cable news in the country, and Fox local affiliates were the most watched non-cable news in the country?

 

True. But none of these affect the corporation, only the dealer profits. The corporation is greatly affected by the loss of revenue due to the huge amount of inventory at the suburban dealers (which are typically loaned to the dealer, the dealer does not buy the car until it is purchased) -- that loss of revenue is not as great with rural dealers. The bottom line is affected by the standing inventory.

While some inventory is necessary for any company to function, excessive inventory is money tied up which cannot be used to grow the business -- that is bad.

 

It is. I just know I haven't seen anything about this on CNN, ABC, NBC, CBS, MSNBC, or The Boston Globe (which implies that the New York Times also hasn't reported on it). A quick Google search of the word "Dealergate" doesn't seem to come up with what a liberal or a democrat would consider a major reputable news source.

I know many people won't but I find this slightly disturbing. Could you imagine if in the 70s a news station was silent on Watergate, or in the 80s about Iran/Contra?

 

I disagree. It is unlikely that people will travel from an Urban area to a rural one just to buy a Chrysler when the nearby Ford, Toyota, or Honda dealerships would do just fine. Closing a dealership close to an Urban area will hurt the corporation's market share a lot more than closing one in a rural area. People in Rural areas are already accustomed to traveling a bit for certain purchases. People in Urban areas are not -- and almost certainly won't.

One major difference. With Watergate and Iran/Contra, there was actual evidence of wrongdoing. We have no such evidence in this case. What we do have is bad math.

 

Look at my earlier comment Drew ...

The same is true for Chrysler dealerships. I pass two and there are several more within a few miles from my travel route -- shutting a few of these down only means driving another few miles to find another one.

I would agree only in those very rare circumstances where ONE dealer serviced a large population area. But that simply doesn't happen. If you have a town of 100,000 you have several GM dealers and two or three Chrysler dealers competing for the same business -- all with big inventories.

The "guidelines" are bogus. Simply tell the company they have to reduce inventory by x% and close dealerships as necessary to reduce redundant inventory. Any other guideline is political in nature and had better be backed up to show it is non-partisan.

 

And if it is shown that Obama did have any signficant involvement in this, it will be covered by all the networks.

Side point: I noticed that Forbes came out with its annual list of Most Influential and Powerful People. The big news was the Angelina Jolie replaced Oprah Winfrey as #1. Obama was ranked #49. I can easily see how any current president would be excluded from such a list, but if you are going to include the current president, doesn't he have to be #1? Isn't Obama (and Bush from 2001-2008) far more influential and powerful as leader of the free world?

 

IIRC, the Forbes list was for people in entertainment (celebrities), not simply the US. Jolie was #1 and Oprah was #2. Obama's "celebrity status" was ranked at #49 -- I don't think there was any attempt to equate celebrity status with political power.

Edit: By not simply the US, I mean it was a list for celebrities only and did not include other people. Otherwise it would include financial powerhouses like Bill Gates and Warren Buffett, along with more political figures than just Obama. If you count political power, financial power, and celebrity status I think even the Queen would be a distant #2 to Obama.

On a side note, 'last edited' line is not showing up....

 

Hmmm, I think you're right about not being exclusive to Americans - I might have midunderstood as the vast majority of the list are Americans. I have edited my previous post.

But even on celebrity status, people came out in droves the world over when Obama was in Europe and now in Egypt. I still think he ranks higher than #49. I have to imagine Obama has better face recognition the world over than Angelina Jolie (although Jolie definitely looks better!)

 

I think this is the first time a sitting president has ever made that list. So maybe that adds some perspective.

 

Given how many GM dealerships there are in your area, it should be obvious that every Chrysler dealership closed will lead to greater and greater losses of the market share to GM, Honda, Toyata, Ford, etc. You or I may purchase our cars by researching before we make our purchase (and thus be willing to drive an extra few miles to the appropriate dealership), but most people do not, and buy from the first salesman able to close a deal -- usually at the first (ie closest) dealership they visit. The number of customers lost by closing even one Chicago location would be far greater than the loss from closing a dealership in, say, Storm Lake, IA, Population 9,706. From a service standpoint, you're absolutely right that rural communities would really lose out, but I think you're a bit off from a sales standpoint. Sure, Chrysler will probably lose most or all of their market share from the Rural areas in which dealerships are closed, but that number won't even put a dent into what they would lose by closing a single dealership in the third largest city in the United States with its population of 2,836,658 people.

Now if you disagree with the criterion used, that's fine, but you'll have quite a lot on your plate if you want to argue that the motivations for those criteria are partisan. We have no reason to believe that.

 

Drew, the number of sales do not always indicate profits -- sales with huge discounts means a loss (but is an overall improvement because it removes inventory and liability). Chrysler (and GM) needs to become profitable -- that means lowering standing inventory significantly to free up cash and reduce liabilities. The reason to close dealerships is to reduce inventory. A rural lot with 50 cars on it is not going to be a drop in the bucket compared to a lot in the suburbs with 1,000 cars on it.

Closing one Chicago dealership (which, by the way, at least three are closing) may reduce market share but will also reduce overhead by a significant amount (1,000 cars = $30,000,000). When it comes to taking a company from rock bottom the profitable it's all about reducing overhead.

GM and Chrysler WILL lose market share. That's a given. If the dealerships actually owned all the cars on the lot, no dealerships would close -- but that's not the way the business is run.

All I've been saying is the dealers should be closed based on overall profitability, not political muscle.

I would agree with your purchasing scenario for USED cars (or pre-owned if you prefer), but not new cars. In general, a person knows what type of new car they want when they go looking, they know what companies make the vehicles they are interested in (they've seen them on the road), and they can figure out where those dealerships are. Does it really make any difference if within 10 miles there are only three Chrysler dealerships instead of five? Reducing dealerships primarily reduces intercompany competition -- there will be less "I can get this 300 for $3,000 less at XYZ Chrysler."

 

Sales at a discount usually just mean a loss to the dealership, since the dealer can still technically profit just selling a vehicle at invoice because the dealer still gets the holdback(and if the car sits on the lot for more than 3 months, it is the dealer, not corporate, that starts losing money). Corporate cares more about how many cars a dealer moves than how much money the dealer makes, since they don't get a piece of any individual dealer's profit and only lose money if they make more cars than all of their dealers can sell.

 

Who is being nieve? It's a question of risk and priorities as many others have pointed out. Would Obama risk media exposure by being linked to cherry picking car dealerships that were specifically Democrat to be saved simply to theoretically increase voting power in these areas by .02% for the next election? Especially when you consider that priority 1 for his administration is to ensure that GM becomes solvent as quickly as possible? Now let's add in the fact that Obama's entire platform runs on trust and moral authority.

So let's review:

Obama risks: 1) Being branded a liar, fraud, and undermining his entire campaign of trust and moral authority 2) Jeopardizing GMs feasibility as a healthy going concern

Obama gaines: 1) A minuscule amount of direct political benefit in select districts for an election in 3 years?

I'll not deny politicians stoop to pretty low levels sometimes to consolidate power. But you need to look at the big picture in this case to realize that Obama has far more to lose by such an action than he stands to gain.

So not only does such a scenario not make political sense in the first place, the evidence that the decision was made can be explained as a phenomena of simple probability (as Drew has elaborated). Strictly speaking, the cost versus benefit is just not there.

 

Ah, more from Drew. Here is a nice little map of asll the closing dealerships chrysler closures Oh, i'm sorry this must be a conservative BS map. Oops, it's in the liberal NY times. Funny those don't look like all rural areas, so your argument is broken.

Well lets look at RLJ, shall we.
In Littlerock(700,000+ pop.) AR Both dealerships get closed so that RLJ's dealership in benton(25,000 pop) which is 26 miles away can stay open. Now according to your own posts the dealers in town should do more bussiness & the ones out in the rural areas should have closed.

In Shreveport(200,000+ pop) both dealers get shut down but the RLS dealer in Bossier City(50,000 pop) stays open. Oh yes the stinson dealership(GOP supporter) is in the top 2% of chrysler dealerships in sales for the COUNTRY.

THe RLS dealership in Lee's Summit will stay open while 3 dealers half the distance from Kansas city are being closed.

Just more of Drews "nothing to see here, move along". Sorry Drew it's too much to cover up, even for obama.

Only if you use democratic fuzzy math. Again you are spewing

Another example of democrat fuzzy math, obama claimed in the interview with Canal Plus that

What an idiot, as even PolitiFact said.

So, not just a Lie but a Pants on fire Lie.
Oh, i kmow, it wasn't his fault, he just reads what is in the teleprompter.

 

Not really. I've seen the map, too, so you and I both know that there were more rural closings than urban ones. Sure, there were urban closings, too, but those dealerships were still less likely to close.

This is the one weird one and I feel no need to explain it away. An instance of cronyism -- if that is what is going on here -- which is isolated to a single dealer network -- in no way proves a larger scandal. I agree that based on currently available information, something does in fact look odd with this single dealer network. There are, however, several possible explanations for it, ranging from a simple oversight to some of the other information like customer service scores upon which those decisions were also based -- and to which we are not as of yet privy. Another possibility is that Landers/McClarty dealerships were given preferential treatment, but based not on their partisan affiliation but instead on the sheer number of dealerships they own and run, stellar customer service scores, etc. The possibility also exists that there really was cronyism at play, but even if there were, that most assuredly doesn't mean it has anything whatsoever to do with Obama, or that it extends beyond this single dealer network (if it only affects this one dealer network, it becomes more likely that someone was trying to do a friend a favor rather than a partisan conspiracy to drive republican dealerships out of business).

The math still in no way suggests that the decisions for all the dealership closings as a whole were partisan, but it does appear that Johnson and McClarty did get to keep a surprising number (ie all) of its dealerships. We still don't have all the information, so it's still too early to judge, but instances surrounding this one dealer network may well be problematic. We'll see.

I'm not crying out "move on, nothing to see here!" either, despite your insistence on believing otherwise. The Little Rock case, as you know, will be seeing its day in court and any misconduct will be brought to light. I, for one, agree with Noesis that Obama couldn't possibly be stupid enough to risk losing everything for such a minuscule gain, and consider your allegation of a top-down scandal to push republican car dealerships out of business more than a little silly. There is still no reason to believe this.

 

perhaps he was referring to area in square miles when he said 'largest' martaug....