Back on Hill, Automakers Defend Dealer Closings

[Old Coot]

Source: New York Times

Automotive executives from General Motors and Chrysler defended their decision to shut down 2,000 dealerships across the country, telling a panel of skeptical lawmakers on Friday that the cull was necessary to their restructuring and survival.

“This is our last chance,” Fritz Henderson, chief executive of G.M., said during a hearing in Washington. “We cannot undergo this sweeping transformation without a comparable effort to remake our retail network.”

The struggling automakers say their large dealer networks are a relic of rapid expansion from five decades ago, and that they now represent a drain on the companies. Chrysler and G.M. argue that they can save billions on support costs, incentive payments and other costs by closing dealerships that perform poorly or do not fit restructuring plans.

“This has been the most difficult business action I’ve ever personally taken,” said James E. Press, president of Chrysler, which won court approval this week to shut down 789 dealers. “Today’s automotive industry cannot support the number of dealers currently in the marketplace.”

Read more: http://www.nytimes.com/2009/06/13/business/13dealers.html?hpw

[Deja Q]

1. How much does GM central to pay GM dealers X, Y, and Z to remain open?

Probably none; why would a franchise HQ pay its members to work under its name?

Or, rather, what are the differences between the auto industry and others; differences so big that dealer closings (which isn't going to exactly help sales) help GM HQ?