GM Puts Your Tax Money to Work
[Guest post by DRJ]
The Colorado legislature is considering a law that would give local GM and Chrysler car dealers whose dealerships were terminated a right of first refusal if manufacturers try to award another franchise in the same area:
“Auto dealerships in Colorado and elsewhere are hitting back at manufacturers closing dealerships and a proposed state law may give them another weapon.
District 38 State Rep. Joe Rice, D-Littleton, is co-sponsoring legislation to require a right of first refusal to dealers who have had their business forcibly shut down by an automobile company if it decides to reopen a franchise in that market area.”
Recently, GM spent $60,000 on a Colorado ad buy to lobby against the proposed legislation:
“The radio and TV ads, which began running Thursday, claim the bill protects “poorly performing” dealers, preventing GM from opening new dealerships that could be more effective in increasing sales.
The ad features a “road closed” sign.
“We must keep driving forward to repay our government loans,” it says. “Don’t let special interests stick taxpayers in reverse.”
That line galled Sen. Shawn Mitchell, R-Broomfield.
“They must be spending tax dollars on Botox to say that with a straight face,” he said at a news conference.”
Both links have examples of profitable Colorado car dealers who were terminated, only to see their franchises resold to other local dealers — one just up the street.
— DRJ
Why were some dealers closed, even those who were making money for GM, while others, who were not, were allowed to stay open?
I saw a number of dealers on Fox Business asking that very same question.
The problem is that the dealers cost the company literally nothing. Dealers must pay their own employees, have to pay for all company provided advertising and it would seem that some dealers were allowed to stay open who had some close personal ties to either the DNC or the Obama administration.
But not for me to worry; I will never purchase another GM product as long as it is owned by the government. Instead, I will stick with Ford.
But then, we can expect the Obama administration to go after Ford just as they are seemingly going after Toyota. Where was all the outrage over GM recalls? Ummmm.
I think we should demand a FOI release on how many Democrat Congress critters have traded in their tony Mercedes and BMWs for a GM product.
retire05 (1e885c) — 2/20/2010 @ 1:36 pmThose dealers should have donated to the Obama campaign. This is the sort of thing that causes business to donate to both parties, one for philosophy, the other for protection.
I have never understood why it was a good idea to close dealerships. Most of those dealers have long histories in the community and know their clientele.
Mike K (2cf494) — 2/20/2010 @ 1:40 pmIt’s all in who you know.
luagha (2ef12d) — 2/20/2010 @ 1:46 pmI never feel sorry for anything that happens to a car dealer.
nk (db4a41) — 2/20/2010 @ 1:48 pm“…I have never understood why it was a good idea to close dealerships…”
Because they were evil employers taking advantage of poor, hardworking, men and women throughout the country.
Now, let me tell you how we’re going to reduce un-employment…
AD - RtR/OS! (e05987) — 2/20/2010 @ 2:26 pmBack at the time there was a lot of interest whether or not the dealers that were closed were more likely to have NOT contributed to Obama/Dems. Apparently there was not enough data to show that was so, unless anybody knows otherwise.
MD in Philly (e347b2) — 2/20/2010 @ 2:51 pmIf the republicans regain control Congress the among the first thing they should do is force GM and Chrysler to file for chapter 11 and let the bankruptcy court supervise the re-organization plan. With the current pension obligation and union obligations and work rules those companies are not viable. Neither can sell enough cars to be profitable as they are nor will they be able to count on future congresses to be sporty enough to keep floating them. An artificially positive cash flow is not profit and that cash flow will not change their insolvency as they now stand.
cubanbob (409ac2) — 2/20/2010 @ 3:18 pmYou should add Fannie and Freddie to that list, too – and AIG!
AD - RtR/OS! (e05987) — 2/20/2010 @ 3:45 pmMD in Philly,
I don’t think it has been proven that the terminated car dealers were targeted because they were Republican donors, but there are still questions regarding political involvement in the selection process:
DRJ (6a8003) — 2/20/2010 @ 3:53 pm“Back at the time there was a lot of interest whether or not the dealers that were closed were more likely to have NOT contributed to Obama/Dems. Apparently there was not enough data to show that was so, unless anybody knows otherwise.”
yeah whatever happened to this conspiracy?
imdw (603c39) — 2/20/2010 @ 4:34 pmSenator Mitchell should add a section to the bill specifying that the street that any new GM or Chrysler dealership’s are located on must have its name changed to “Chicago Way”…..
redc1c4 (fb8750) — 2/20/2010 @ 4:56 pmRecall a speaker at the 9/12 event in DC. IMO, the most moving oratory of the day. Was a government forced ex-car dealership owner. Where in the Constitution does it state the government, or president can shut down sucessful business owners on a whim? What industry is safe?
Mon (3c07a2) — 2/20/2010 @ 8:12 pmThe troll wonders if there was a conspiracy. The reason it could never be proven is because new auto dealers are small businessmen and the number who would contribute to Democrats is so small that statistically valid studies are impossible.
Mike K (2cf494) — 2/20/2010 @ 8:49 pmWhere in the Constitution???
AD - RtR/OS! (e05987) — 2/20/2010 @ 8:50 pmIn the same section that explains: “I Won!”
Anyone what wants to be a GM dealer deserves it I think.
Like anyone’s gonna buy those ugly dirty socialist crapmobiles without a subsidy.
happyfeet (713679) — 2/20/2010 @ 9:22 pmimdw:
After the Chrysler decision was already made on an expedited basis, the terminated Chrysler dealers collectively filed a summary pleading that consolidated prior individual pleadings that Chrysler’s “decision to reject the Dealership agreements was based on bad faith, discrimination and other improper considerations.”
In an Order Authorizing the Sale [of Chrysler’s assets, Docket #3232 dated 6/1/2009], the Bankruptcy Court held the dealer termination issues were overruled, but not because they were invalid — in fact, the Court specifically found there was a “bona fide dispute with respect to certain of the Claims asserted (e.g., claims of certain dealers relating to the proposed rejection of their dealership agreements) (See May 28, 2009 Hearing Tr. (Testimony of Peter Grady); May 27, 2009 Hearing Tr. (Testimony of Alfredo Altavilla))” [Subpart Z on page 18].
However, because Fiat refused to buy Chrysler’s assets subject to liens and claims, the Court determined the sale of Chrysler’s assets to the new Chrysler company would not be completed unless the assets were transferred free and clear of prior liens and claims. Accordingly, it’s my understanding the Court held the terminated dealers’ claims would only attach to assets held by old Chrysler.
In other words, even if the terminated dealers had valid claims, there may not have been any assets to pay them.
DRJ (6a8003) — 2/20/2010 @ 9:29 pmit’s cool how you do that sometimes even when you’re not getting paid
happyfeet (713679) — 2/20/2010 @ 9:37 pmthere’s a trader at PW and he’s smart too… you think he ever busts out with a stock tip?
Not even once.
happyfeet (713679) — 2/20/2010 @ 9:40 pmThis is a fluke, hf. As a rule, I’m not that interested in the details of Chapter 11 cases but I followed the Chrysler case because I felt sorry for the terminated dealers, and I was intrigued by the Lone Ranger aspect of the Indiana pension fund appeal.
DRJ (6a8003) — 2/20/2010 @ 9:48 pmTexas is getting its Lone Ranger on too with the poley barz.
I am very proud.
happyfeet (713679) — 2/20/2010 @ 9:50 pmAre you talking about the strip club fee case or did I miss something?
DRJ (6a8003) — 2/20/2010 @ 9:53 pmthis
happyfeet (713679) — 2/20/2010 @ 9:55 pmHeh. That’s more important than the strip club case.
DRJ (6a8003) — 2/20/2010 @ 10:14 pmfeets – Texas os not alone on that type of challenge to the EPA. Virginia is proceeding along the same lines, damn copycats.
daleyrocks (718861) — 2/20/2010 @ 10:27 pmsays you……
redc1c4 (fb8750) — 2/21/2010 @ 3:22 am“The troll wonders if there was a conspiracy. The reason it could never be proven is because new auto dealers are small businessmen and the number who would contribute to Democrats is so small that statistically valid studies are impossible.”
And no one was sharp enough to advance the argument that you don’t have to target individual dealers — if you just hurt dealers in general, you’re targeting republican donors?
imdw (017d51) — 2/21/2010 @ 6:52 amThanks for the info, DRJ.
On one hand I understand at least some of the factors that go into who has standing to file a claim, and what things take priority,
but
whenever I hear something like “the claim is valid”, but “because of such and such we can’t/ won’t do anything about it” it seems to me to be de facto injustice.
It would seem to me that rather than receive any damages the dealers could just ask to keep their dealerships which were their own assets anyway. But I guess that would be forcing a business contract onto a new corporation after bankruptcy,
except who was it that canned the dealers, the new or the old?
Too bad the individual citizen can’t do it like the feds can…
MD in Philly (e347b2) — 2/21/2010 @ 8:57 amback taxes? oh, that was the old MD in Philly, this is the new MD in Philly and we don’t have to live by prior agreements.