View Full Version : Beginning to see a pattern yet? Race/gender bias reported by IG for dealer closures
Nathan_Bell
07-22-10, 07:42
It comes down that the basis for the auto dealership closures ended up looking like an Affirmative Action campaign with gender and race playing a significant part in it. Also playing a part was the location of the dealers. Rural dealers were snuffed out where metro ones were not hit.
The first being par for the course with the current administration and is in-arguable. The latter seems to be an economic attack against those that voted against him.
The below linked article offers a pretty damning synopsis of the IG's report.
http://www.americanthinker.com/2010/07/race_played_role_in_obama_car.html
SIG TARP report in full (45 page PDF) linked below
http://www.sigtarp.gov/reports/audit/2010/Factors%20Affecting%20the%20Decisions%20of%20General%20Motors%20and%20Chrysler%20to%20Reduce%20Their%20Dealership%20Networks%207_19_2010.pdf
I think I am misunderstanding something. I though owning a dealership was like owning any other franchise? Im not sure how it works but I guess they get the cars on loan basically and when they sell GM gets the money.
Does GM pay for anything else except giving them the cars to sell? I thought the dealership paid for everything else, ie land, buildings, payroll? Who cares how many dealers there are.
Belmont31R
07-22-10, 08:31
I think I am misunderstanding something. I though owning a dealership was like owning any other franchise? Im not sure how it works but I guess they get the cars on loan basically and when they sell GM gets the money.
Does GM pay for anything else except giving them the cars to sell? I thought the dealership paid for everything else, ie land, buildings, payroll? Who cares how many dealers there are.
Im sure the 10's of thousands of people who got laid off as a result care, and how many of these people are now sucking up unemployment dollars instead of working?
But I'm sure Obama cares about jobs when his admin is axing tens of thousands of jobs. Auto dealers, NASA, oil drillers, ect. Just killing segments of the economy we can do without, right? I guess the bright side is the printing presses still work, and China has billions more to lend us we won't be able to pay back.
A good friend of my owns/used to own a small Buick-Pontiac-GMC dealership in South Jersey. Was opened by his father! His mother worked there keeping the books. They never moved many cars, but another friend of my bought his '04 GTO there and that dealership installed my 12-bolt in my Trans Am when the 10-bolt blew up at the track. Really nice guy.
Like I said, family owned dealership for many years. His showroom was only big enough for 1 car, lot was big enough for maybe 30 cars, repair center had I thnk 4-5 lifts. He sold mostly trucks as it was a very rural area and his family and dealership was a fixture in the town. Had a MINT commemorative eddition Trans Am [White/Blue] convertable sitting under a car cover with almost no miles on it in the repair garage lol.
Well, 3 weeks or so ago he had to shut down. GM told him they do not want to keep open small dealerships. They want HUGE Wall-Mart type Automotive Supercenters, where you have every make and model GM makes available by the hudreds if not thousands. They wanted him to keep something like a $20MIL inventory at all times. He was totally unable to do that, so he had to shut down.
Broke my heart when I heard that. Guy is as nice as they come, and if I needed a GM part for my car, would always give it to me at cost without me even asking.
Its so sad. I don't know much about the Affirmative Action or racist tendencies of this whole deal, but it hurts me to see a friend loose his family business only because he was not a big fish according to GM.
Keeping small businesses running right Barry? Pfffff
:(
Im not sure how it works but I guess they get the cars on loan basically and when they sell GM gets the money.
No, that is not how it works in most cases. The dealer borrows the money to buy the cars and the line of credit is secured by the cars.
In the industry, this line of credit is called a floorplan and might be granted by a local bank, a big regional bank, a commercial finance company or maybe by GMAC, which, if you will recall, had lots of problems of its own as it also got into the subprime lending business in addition to financing autos for dealers and individual buyers.
The manufacturer also controlled the dealer's allocation and, in many cases, required dealers to buy a certain number of slow selling models in order to get a limited number of hot selling models.
Im sure the 10's of thousands of people who got laid off as a result care, and how many of these people are now sucking up unemployment dollars instead of working?
But I'm sure Obama cares about jobs when his admin is axing tens of thousands of jobs. Auto dealers, NASA, oil drillers, ect. Just killing segments of the economy we can do without, right? I guess the bright side is the printing presses still work, and China has billions more to lend us we won't be able to pay back.
I hope my post didnt come off as advocating closing of dealerships. I mean if the dealers can keep them open and profitable there is no reason to close them.
Like I said I dont know how it works, but if GM sends a dealership 5 cars a year and they sell them and they can stay open why should they be closed?
Unless I am missing something like, GM pays the dealership money to stay open. Yes I know GM pays them to do warranty work but that money has to be paid no matter how many dealers they have.
montanadave
07-22-10, 09:11
The below linked article offers a pretty damning synopsis of the IG's report.
Damning indeed, but hardly an accurate synopsis. Mr. Tate's piece on the American Thinker website contrives to construct an elaborate conspiracy theory of racial prejudice and political retribution based upon one paragraph in a forty-plus page SIGTARP report.
Here's but a sample of Mr. Tate's journalistic meanderings:
"Additionally, it has been widely theorized that dealers targeted for closure as a result of Obama's interference were predominantly those who donated campaign contributions to Republicans. Although evidence to date is largely anecdotal, given what we've already reported about the Obama administration's handling of the auto bailout, such speculation does have considerable grounds for support."
"It has been widely theorized." Translation: Somebody posted it on their blog and Glenn Beck wrote it on his magic chalkboard.
"Although evidence to date has been largely anecdotal." Translation: There's no documented evidence but I know a guy who heard a guy say he... yadda, yadda, yadda,
"Given what we've already reported." Translation: Believe me now because I'm repeating something I've said before.
As the saying goes, "opinions are like assholes, everybody's got one" and Mr. Tate is certainly entitled to his. But his article is hardly objective and perpetuates an alarming trend of posting an op-ed piece in the guise of factual reporting.
.............and perpetuates an alarming trend of posting an op-ed piece in the guise of factual reporting.
Yes, it is an alarming trend, yet widespread in both the blogisphere and the national media.
Then the problem is exacerbated by readers who take something like this for gospel and pass it on as if it were gospel adding their own editorial to the firestorm.
Yes, it is an alarming trend, yet widespread in both the blogisphere and the national media.
Then the problem is exacerbated by readers who take something like this for gospel and pass it on as if it were gospel adding their own editorial to the firestorm.
Well by your own post about how the dealership has to buy all the cars, I ask again who cares how many dealerships there are?
How does closing a dealership that was profitable make any sense?
Belmont31R
07-22-10, 09:34
Damning indeed, but hardly an accurate synopsis. Mr. Tate's piece on the American Thinker website contrives to construct an elaborate conspiracy theory of racial prejudice and political retribution based upon one paragraph in a forty-plus page SIGTARP report.
Here's but a sample of Mr. Tate's journalistic meanderings:
"Additionally, it has been widely theorized that dealers targeted for closure as a result of Obama's interference were predominantly those who donated campaign contributions to Republicans. Although evidence to date is largely anecdotal, given what we've already reported about the Obama administration's handling of the auto bailout, such speculation does have considerable grounds for support."
"It has been widely theorized." Translation: Somebody posted it on their blog and Glenn Beck wrote it on his magic chalkboard.
"Although evidence to date has been largely anecdotal." Translation: There's no documented evidence but I know a guy who heard a guy say he... yadda, yadda, yadda,
"Given what we've already reported." Translation: Believe me now because I'm repeating something I've said before.
As the saying goes, "opinions are like assholes, everybody's got one" and Mr. Tate is certainly entitled to his. But his article is hardly objective and perpetuates an alarming trend of posting an op-ed piece in the guise of factual reporting.
It means there has not been an official study done on it.
Either way this IG report at least confirms some of those "theories" about all these dealership closings.
And Beck's Magic Chalkboard sure gets under the skin of at least some Obama people if they have to tell Sherrod to resign before she ends up on Glenn Beck. :cool:
Belmont31R
07-22-10, 09:40
Well by your own post about how the dealership has to buy all the cars, I ask again who cares how many dealerships there are?
How does closing a dealership that was profitable make any sense?
It doesn't, and why .gov running businesses is never a good idea. These are people who can't even run their own Congressional bank or cafeteria, USPS, AMTRAK, social security, medicare, and a whole host of other items that go bankrupt under government control...now they are trying to ruin private business, too.
This admin is so inept....I wonder how many people have been laid off as a direct result of their decisions.
Business_Casual
07-22-10, 09:42
I no longer care if it is accurate as long as it hurts the socialists and bolsheviks in the administration. They never tell the truth so why should it matter?
B_C
How does closing a dealership that was profitable make any sense?
It doesn't make sense to me.
montanadave
07-22-10, 10:25
I no longer care if it is accurate as long as it hurts the socialists and bolsheviks in the administration. They never tell the truth so why should it matter? B_C
While you may be comfortable with such casual disdain for the truth, I am not. And to justify that disdain by arguing "the other guy does it too" and "the ends justify the means regardless of the cost" is akin to suggesting that we, as a nation, must sacrifice the very ideals this nation was predicated upon in order to save it. To my mind, such a reckless course of action leaves us with something which was hardly worth saving.
"Among the calamities of war may be jointly numbered the diminution of the love of truth, by the falsehoods which interest dictates and credulity encourages." Samuel Johnson, 1758
Welcome to the jungle. :suicide:
montanadave
07-22-10, 10:32
Either way this IG report at least confirms some of those "theories" about all these dealership closings.
On the contrary, it does nothing of the sort.
As the gist of Mr. Tate's article implies that the Obama administration targeted dealerships for closure as an act of political retribution, I can find nothing in the SIGTARP report which supports that conjecture.
Belmont31R
07-22-10, 10:42
On the contrary, it does nothing of the sort.
As the gist of Mr. Tate's article implies that the Obama administration targeted dealerships for closure as an act of political retribution, I can find nothing in the SIGTARP report which supports that conjecture.
I didn't say that was proven.
On the contrary, it does nothing of the sort.
As the gist of Mr. Tate's article implies that the Obama administration targeted dealerships for closure as an act of political retribution, I can find nothing in the SIGTARP report which supports that conjecture.
So what is the reason they were closed?
Nathan_Bell
07-22-10, 10:50
On the contrary, it does nothing of the sort.
As the gist of Mr. Tate's article implies that the Obama administration targeted dealerships for closure as an act of political retribution, I can find nothing in the SIGTARP report which supports that conjecture.
So what do you opine that the reason for the closures of the rural and small market dealerships? Areas where GM had a competitive advantage, on the urging of the Administration?
So what do you opine that the reason for the closures of the rural and small market dealerships? Areas where GM had a competitive advantage, on the urging of the Administration?
I opine that it was a bad business decision on the part of the government trying to run a business when said government can't even balance a budget.
ETA: I readily admit, however, that there may have been some expense to GM for those dealerships that I am unaware of. I have never understood how closing dealerships helped GM. It seems to me that a car sale is a sale wherever it happens. On the other hand, I can easily see how consolidating auto lines and killing dog models would be to GM's benefit.
Nathan_Bell
07-22-10, 11:11
I opine that it was a bad business decision on the part of the government trying to run a business when said government can't even balance a budget.
If I had my druthers, they wouldn't have bailed them out at all. It should have gone in front of a bankruptcy judge, or considering the size of the mess a panel of BK judges, and followed th eletter of the law in regards to the financial situation they were in.
This did not happen. Reading the report it does not seem there was any rhyme or reason behind the GM closures and appeals process. This in addition to the reports that were coming out at the time of several large dealerships getting the axe, when other less successful ones being allowed to continue feeds the concern that there was directions for this to happen.
This puts us right into policy decisions. Read page 33 (pg 37 in the PDF) to see some of the policy issued.
Nathan_Bell
07-22-10, 11:19
I opine that it was a bad business decision on the part of the government trying to run a business when said government can't even balance a budget.
ETA: I readily admit, however, that there may have been some expense to GM for those dealerships that I am unaware of. I have never understood how closing dealerships helped GM. It seems to me that a car sale is a sale wherever it happens. On the other hand, I can easily see how consolidating auto lines and killing dog models would be to GM's benefit.
Responding to your ETA.
Aye. GM needed to prune a lot of their models and lines. GMC truck should have gotten all of the body on frame vehicles (trucks vans big SUVs), Chevy gotten the economy models and sportier ones, Buick gotten the family cars and unibodies SUVs, and Caddy should have been kicked in the ass and made into the R&D to production branch. Where they could demand premium prices to push new chassis and technology into the GM lines. I do not care for all of the Japanese auto mfg's approaches, but using their luxury lines for that has worked well for them.
variablebinary
07-22-10, 11:24
I have no doubt the closings were targeted, but I doubt race was the motivating factor.
Nathan_Bell
07-22-10, 11:29
I have no doubt the closings were targeted, but I doubt race was the motivating factor.
That is something that they address directly in the SIGTARP report. It is on the list of reasons GM gave.
variablebinary
07-22-10, 11:47
That is something that they address directly in the SIGTARP report. It is on the list of reasons GM gave.
I cant see it. The PDF isnt loading. Can you copy excerpts here.
montanadave
07-22-10, 11:51
So what is the reason they were closed?
So what do you opine that the reason for the closures of the rural and small market dealerships? Areas where GM had a competitive advantage, on the urging of the Administration?
I don't presume to fully understand the rationale by which these decisions were made. I encourage you to read the SIGTARP report and draw your own conclusions. Frankly, I am not a business major or a marketing analyst and much of the information and data in the report are a bit arcane for me. And I can't prove a negative--that is to say, I can't state categorically that Mr. Tate's conjectures have no validity.
My point was, and is, that the SIGTARP report cited by Mr. Tate does not offer any viable evidence in support of his conclusions (i.e. that the Obama administration exerted undue influence on GM management to specifically target dealerships for closure as a means of political retribution).
The sole reference to race in the SIGTARP report states that some dealerships were retained because, among other reasons, they were "minority- or woman-owned dealerships." That there are affirmative action programs in both the public and private sector is nothing new and certainly nothing unique to this administration. Many can, and do, find such programs objectionable but that is an altogether separate debate.
variablebinary
07-22-10, 11:52
How does closing a dealership that was profitable make any sense?
I was in a position where I was tasked in helping to determine which locations had to be closed for the sake of the business.
There is a lot that goes into it, and simply being profitable wasn't enough to ensure survival.
Nathan_Bell
07-22-10, 12:13
I don't presume to fully understand the rationale by which these decisions were made. I encourage you to read the SIGTARP report and draw your own conclusions. Frankly, I am not a business major or a marketing analyst and much of the information and data in the report are a bit arcane for me. And I can't prove a negative--that is to say, I can't state categorically that Mr. Tate's conjectures have no validity.
My point was, and is, that the SIGTARP report cited by Mr. Tate does not offer any viable evidence in support of his conclusions (i.e. that the Obama administration exerted undue influence on GM management to specifically target dealerships for closure as a means of political retribution).
The sole reference to race in the SIGTARP report states that some dealerships were retained because, among other reasons, they were "minority- or woman-owned dealerships." That there are affirmative action programs in both the public and private sector is nothing new and certainly nothing unique to this administration. Many can, and do, find such programs objectionable but that is an altogether separate debate.
Consider that SIGTARP does specifically state that another course of action would have been chosen except for it the "shared sacrifice" mandate from the POTUS. The fact that they are willing to lay that much blame on the feet of the POTUS makes other possible motivations seem more likely.
There is a fair amount of reading between the lines done by Tate to come up with the position that he has. It is not a stretch into tinfoil land though, as I recall reading several reports of the more established, successful dealership getting the axe and the lesser one remaining when these closings were happening.
I was in a position where I was tasked in helping to determine which locations had to be closed for the sake of the business. There is a lot that goes into it, and simply being profitable wasn't enough to ensure survival.
Could you please share some of the more significant factors with us, including how those factors saved money for GM? Thanks!
variablebinary
07-22-10, 13:32
Could you please share some of the more significant factors with us, including how those factors saved money for GM? Thanks!
This is a simplistic scenario:
If I have a site in the burbs making $50k a month in the black, and a I have a metro site making two million a month in the red, I'd rather lose the burbs site, and all its operating costs, and force the rural customers into my metro site, making it more profitable and keeping my larger monthly revenue stream
There are obviously other factors, but it sorta shows that just being profitable alone shouldn't be the only criteria for determining who says and who goes.
Nathan_Bell
07-22-10, 13:37
This is a simplistic scenario:
If I have a site in the burbs making $50k a month in the black, and a I have a metro site making two million a month in the red, I'd rather lose the burbs site, and all its operating costs, and force the rural customers into my metro site, making it more profitable and keeping my larger monthly revenue stream
There are obviously other factors, but it sorta shows that just being profitable alone shouldn't be the only criteria for determining who says and who goes.
Problem with that scenario is that you don't know if the rural folks will drive the extra hour to get to the metro. They might change brands.
variablebinary
07-22-10, 13:45
Problem with that scenario is that will the rural folks drive the extra hour to get to the metro, or will they change brands?
That is a risk, but it is a much smaller risk than closing a metro dealership which will have higher foot traffic and business potential and most likely be making more money. The competition is also much stiffer in the cities so the odds of a metro customer driving 50 miles to a rural location is slimmer.
Again, its a simplistic scenario, but its a common theme where mostly rural states get shafted, and big citiy states get the perks. More people means more money, which means more attention received.
Elections, business, everything
Nathan_Bell
07-22-10, 13:53
That is a risk, but it is a much smaller risk than closing a metro dealership which will have higher foot traffic and business potential and most likely be making more money. The competition is also much stiffer in the cities so the odds of a metro customer driving 50 miles to a rural location is slimmer.
Again, its a simplistic scenario, but its a common theme where mostly rural states get shafted, and big citiy states get the perks. More people means more money, which means more attention received.
Elections, business, everything
Aye, understand was going super simplified. ASSuming in this sicenario you would pressure the metro location to get its ducks in order so it isn't pissing cash down the drain.
If I have a site in the burbs making $50k a month in the black, and a I have a metro site making two million a month in the red, I'd rather lose the burbs site, and all its operating costs, and force the rural customers into my metro site, making it more profitable and keeping my larger monthly revenue stream
A couple of things:
1. If you are in the red you are not "making" $2 million a month. "Making" implies a net profit or "in the black". "In the red" implies a net loss. Perhaps you meant to say grossing $2 million a month, but still losing money?
2. How does forcing consolidation of presumably independently owned dealerships help GM? Doesn't it simply hurt the profitable dealership and help the unprofitable dealership. Sounds like redistribution of wealth to me.
And I still don't see where it helps GM unless GM actually owned both dealerships, which, as I understand it, isn't how most dealerships are structured.
Nathan_Bell
07-22-10, 14:34
A couple of things:
1. If you are in the red you are not "making" $2 million a month. "Making" implies a net profit or "in the black". "In the red" implies a net loss. Perhaps you meant to say grossing $2 million a month, but still losing money?
2. How does forcing consolidation of presumably independently owned dealerships help GM? Doesn't it simply hurt the profitable dealership and help the unprofitable dealership. Sounds like redistribution of wealth to me.
And I still don't see where it helps GM unless GM actually owned both dealerships, which, as I understand it, isn't how most dealerships are structured.
I am guessing that they looked at incentive programs that they needed to move their vehicles at some of these dealers cost them money?
I have no doubt the closings were targeted, but I doubt race was the motivating factor.
It was a secondary consideration after political support.
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