In a bid to survive bankruptcy, Chrsyler is closing nearly 800 dealerships, a full quarter of the companyâ€™s dealers. The dealers themselves had no say.
While bankruptcy may be a better long-term solution for Chrysler than continued government bailouts, the short-term will not be pretty. Car dealerships provide a lot of jobs and a lot of tax revenue for communities. They also tend to sponsor charity events and spend a lot on advertising, particularly in local newspapers which, as we all know, arenâ€™t doing so well these days.
The National Automobile Dealers Association (NADA) has already launched a campaign calling on President Obama to act now to stop the Chrysler closings and the ones expected to affect over 1,000 GM dealers in the next few weeks and months. One of NADAâ€™s talking points is that dealers, on average, pump $16.5 million per year into their communities. The lost revenue will be felt deeply in a lot of places.
But just because something is painful doesnâ€™t mean itâ€™s unnecessary. No one wants to see this kind of turmoil in what was once one of Americaâ€™s proudest companies, but Chrysler simply canâ€™t hope to continue without making cuts. Better to remove a quarter of their dealers now than to have to shutter them all in a year or two. Thatâ€™s the raw and unfortunate calculus. But Iâ€™m sure thatâ€™s cold comfort to those who will lose their jobs.