In the Auto Dealer Closures, The Plot Thickens…


Conspiracy alert! Interesting news coming out of bankruptcy courts handling the closure of Chrysler dealerships around the nation.

Tyler Durden at Zero Hedge is reporting some very interesting statistics, which if they can be verified, strongly suggest that favoritism cronyism Chicago-style business as usual played a fairly large part in at least some of the dealer closures. Mr. Durdin writes:

The dominant theme among all dealers is that virtually all acknowledge they were compliant with both Project Alpha and Project Genesis: the key cut off criteria that Chrysler stated it had used in determining who gets terminated and who stays. In fact, the bulk of the dealers had significantly above average statistics from a sale, MSRP, customer satisfaction and service point of view within the entire Chrysler dealer universe…

One particular declaration caught my eye, that of Ethel L. Cook, a dealer based in downtown Little Rock, a town near and dear to the former resident. I believe readers can draw their own conclusions based on Mr. Cook’s sworn testimony (highlights mine).

On May 13, 2009, I received a letter from Chrysler notifying the Dealership that Chrysler had elected to “reject” our Dealer Agreement. I am obviously very familiar with the Little Rock, Arkansas dealer network and was surprised because both Cook and Crain, the only Chrysler dealers in Little Rock, were both rejected. Therefore, Chrysler’s action would, on its face, result in a complete lack of representation in a major American city. Since that would be a ludicrous result, one can only infer that Chrysler has a more sinister motive.

Because it is inconceivable that Chrysler will not have a dealership in Little Rock going forward, the only conclusion that one could draw is that, after review, the evidence in other markets in the region, that Chrysler now intends to “give” the Little Rock market to a Landers-related dealer.

Having reviewed the pattern of assumption and rejection of dealers throughout their region, I have detected a pattern: In every market where there is a dealership connected with former Penske Automotive executive Steve Landers, or his new automotive partnership with “Mac” McLarty (former Chief of Staff for President Clinton) and Robert L. Johnson (majority owner of the Charlotte Bobcats), the competitors are rejected.

In the Little Rock, Landers Chrysler Dodge Jeep is located far out of town in Benton, Arkansas. Nevertheless, the two Little Rock dealers, Cook and Crain were rejected.

Cook goes on to give five more concrete examples of dealerships associated with Landers/McLarty being accepted despite being inconveniently located to their local markets, while dealers closer to the market were rejected.

Mr. Cook ends his testimony with the following statement:

Favoritism and cronyism towards preferred dealer group is not a valid exercise of business judgment.

Sure it is, Mr. Cook. It’s the Chicago way.

We’ll be watching Zero Hedge, as well as Doug Ross, who is also  doing excellent reporting , to see if anything comes of this.

Exit question: Isn’t this the type of incisive investigative journalism that our expert, impartial, professional mainstream media is supposed to be doing?


H/T: Malkin


One Response to In the Auto Dealer Closures, The Plot Thickens…

  1. Gerry Ashley says:

    I’m not in a location where I can immediately put my hands on it, but I’ve also come to suspect that dealerships where owners had supported candidates other than Barack Obama have been told they are out.

    I thought the purpose of this trimming down was to help the manufacturers focus on the dealerships that stand the best chance of helping restore them to profitability… NOT which ones are most likely to fly the “Obama for re-election” banner.

    I see where a number of dealerships are going to court to challenge their closures. I hope they win. But I’m not holding my breath.

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