Leave Capitol Hill to Congress and Detroit to Detroit

by Brian Johnson on August 20, 2009

ChryslerOne of the ways that Chrysler and GM have set about to recover is by taking the opportunity afforded to them by their bankruptcies to shrink the number of car dealerships to a managable level.  Before the bankruptcy, this reduction in dealerships could only have been managed on a dealer-by-dealer basis through painstaking renegotiations of contracts and would have proven a very expensive undertaking.  In response, the House of Representatives passed a bill that would make it illegal for these bailed out giants to sever those ties.  Should the bill become law, the auto companies will be forced to re-up contracts which they can no longer afford to maintain.  Essentially, Congress is telling the automotive industry how to conduct its business with an eye to keeping voters happy and without acknowledging the very real threat of this legislation: that it could force Chrysler and GM  into bankruptcy again.

Like others, I believe that the people responsible for running America’s automotive industry are also responsible for their companies’ bankruptcies.  Furthermore, I am not overly confident that they can do what it takes to turn the industry around now. However, I have no doubt than they know more about their particular business than Congress does. 

Unfortunately, rather than listening to the industry, Congress is trying to dictate basic business practices.   The real problem here, though, is not what would happen were the bill to pass.  It most likely won’t.  Despite its success in the House, the Senate and the President have been unsupportive of the bill.  The real problem here is that a majority of the members of the House think that they know how to run a car company…

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