Detroit Bureau on Twitter

Dealers Buzzing on Chrysler Bankruptcy

Offshore brand organization is shaken by the President's patriotic sales pitch.

by on Apr.30, 2009

Cody Lusk, AIADA

Not so fast Mr. President, said Lusk.

President Barack Obama rattled the windows around the car business with a “buy American” plea as he rolled out the administration’s plans for rebuilding Chrysler with help from Fiat.

The American International Automobile Dealers Association responded almost immediately to a speech in which President Barack Obama asked Americans to “buy American” vehicles as part of our economic recovery.

“AIADA objects to President Obama’s ‘buy American’ solution for the auto sector,” said AIADA President Cody Lusk. “In today’s globalized economy ‘buying American’ can mean anything from buying a Chevy Avalanche built by Mexican workers in Silao, Mexico to buying a Toyota Camry built by Americans in Georgetown, Kentucky.”

“The real issue is that every car purchased in America today is a shot in the arm for our economy, a boost for car dealers, who are the cornerstones of communities all across this country, and a win for American consumers who have the opportunity to choose the vehicles that best meet their driving needs. President Obama must recognize that protectionist policies and statements like “buy American” have no place in America’s economic recovery,” said Lusk.

Critics would maintain that the real issue is the closed markets to American exports of all kinds by the governments of offshore-based automakers, including, Korea, Japan, and China, among others. This is destroying American jobs. So is the refusal of  European and Asian governments to increase deficit spending to stimulate their home markets now that the American market has collapsed, and can no longer be a dumping grounds for their exports. The U.S. Treasury Department has been highly critical of such practices recently, and a trade war is already underway.

Meanwhile, the National Automobile Dealers Association also said it was disappointed the automaker was forced into bankruptcy.

“Bankruptcy is not the preferred option, but we have every expectation that Chrysler and its dealers will emerge stronger and more competitive than ever. We’re pleased to hear of the announced merger with Fiat which should help speed up Chrysler’s restructure,” NADA chairman John McEleney said.

“Chrysler’s bankruptcy is especially disappointing. Like so many others, we were hopeful that all of the stakeholders would be able to reach agreement, and Chrysler’s restructuring could move forward out of court. The key now is to get in and get out of bankruptcy as quickly as possible,” McEleney said.

Since NADA represents all dealers – both domestic and international – our concern is to minimize disruption to the entire auto industry. In other words, the shorter the bankruptcy, the better for the entire industry – both domestic and international, NADA maintained.

However, “bankruptcy must not be used to drastically reduce dealer numbers. Dealers generate more than 90% of manufacturer revenue and are not a cost to the automaker,” McEleney said.

“A rapid reduction in dealer numbers would not only do absolutely nothing to improve Chrysler’s viability in the short term, but it would actually work against Chrysler’s stated objective to increase revenue and cut costs,” he said.

Tags: , , , , , , , , , , ,

Comments are closed.