I was bit surprised to read this story about the State Legislature considering stepping in to save local Chrysler dealers. Last week Chrysler sent notices to nearly 800 dealers out of a current network of about 3,200 that it was revoking their franchise rights.
I can understand why a business owner would be upset. They had been loyal franchisees many of whom had been selling cars for decades. But my issue with these guys is; didn't they see it coming? The company was restructuring in bankruptcy for crying out loud! Is this really an after-effect of the big Fed-Auto-Bailout? or the actions of the free market's invisible hand?
Chrysler has been in trouble for a long time. Case in point; the typical Chrysler dealership sold 303 vehicles per showroom last year. Toyota sold 1,292 and Honda did 1,219/per. Also, it's not like they didn't see new closures coming, the company has reduced dealerships from 4,320 in 2001 to 3,188 by the end of April this year.
If Chrysler now wants to open a new dealership within 150 miles of one they just closed down, the Legislature's proposal would require Chrysler to first offer the former franchisee the opportunity to (re)open the business. I suppose that's not all that bad, but it seems like that should be between Chrysler and it's dealers - I don't see a reason why the legislature should be involved. It's more of a contract issue in my mind that should be settled in the Judicial system - not Legislatively.
So why is the State Legislature getting involved? As much railing as the Legislature does against 'bailouts' and government intervention, it seems ironic for them to step into the fray at this point. Perhaps it's because one of their own - Rep. Patrick Painter is himself a Chrysler dealer who is now losing his dealership.
Ryan's takeaway: It doesn't look good for the Legislature or the State GOP when they apply conservative principles selectively.
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