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Thread: TARP Audit Questions Rush to Close Auto Dealers

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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by Lord Tammerlain View Post
    If the dealerships were not productive then the job loss's were needed were they not. Unless you like the government to subsidize car dealerships
    The car companies were already in the process when Obama demanded it so it would have happeened anyway

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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by ptif219 View Post
    The car companies were already in the process when Obama demanded it so it would have happeened anyway
    The car companies were in the process of going bankrupt and closing down, which is why they came running to the government, to save the company, which would save jobs. The government demanded a business plan that would put the companies on a road to profitability, part of that plan was the accerated dealership closing's that bankruptcy allowed to take place at a minimum of costs to GM. If GM waited untill it was no longer in bankruptcy it would have cost alot more money
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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by Lord Tammerlain View Post
    The car companies were in the process of going bankrupt and closing down, which is why they came running to the government, to save the company, which would save jobs. The government demanded a business plan that would put the companies on a road to profitability, part of that plan was the accerated dealership closing's that bankruptcy allowed to take place at a minimum of costs to GM. If GM waited untill it was no longer in bankruptcy it would have cost alot more money
    Wrong they had not even filed yet they were still trying to fix it. Obama stepped in and took over

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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by Lord Tammerlain View Post
    Check the breaking news section

    GM and Chyrsler were closing dealerships before the crisis and would have liked to close more before, but could afford it. The bankruptcy allowed them to break contracts and close the ones they wanted without financial penalty.

    Unless you like having government money support unproductive workers at car dealerships, this was a good move
    The dealers are seperate entities from Gm and C-h-r-y-s-l-e-r. Closing them had zero effect on GM and Chrysler's sinking, or swimming.
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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by apdst View Post
    The dealers are seperate entities from Gm and C-h-r-y-s-l-e-r. Closing them had zero effect on GM and Chrysler's sinking, or swimming.
    Here is something to read

    Why are Chrysler and General Motors closing so many dealerships? - By Christopher Beam - Slate Magazine

    How does shuttering dealerships help car companies?

    It saves them money. Car companies don't actually own dealerships—instead, they have contractual agreements that dictate factors like location, display space, signage, and service options. Nevertheless, Chrysler and GM and other auto manufacturers must maintain a large, costly field force of trainers (to train technicians to fix cars), salespeople (to persuade dealers to buy more cars), and auditors (to verify claims for reimbursement). The more dealerships, the more go-betweens a car company needs to employ and the more money it has to shell out.

    Shuttering dealerships could also result in less intra-brand price competition. Car buyers will typically visit at least two different dealerships in order to compare prices before making a purchase. By playing dealers against one another, buyers lop an estimated 2 percent off revenues. But if there are fewer dealers, customers can't haggle as easily, and car companies make more money. There's a tradeoff, of course—fewer dealerships means customers have to drive farther. But at the moment, there are so many dealerships that the benefits of reducing price competition outweigh the harm of having fewer locations.

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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by Ockham View Post
    Thanks for the correction.

    Obama should not have bailed out the car company's.
    OK... please describe what the world would look like right now if he had not.

    The baseline of your analysis: The government likely did not lose a dime on this transaction (and probably made money)... we still have an auto industry (with GM appearing to be a very viabrant company ready to re-float shares in one of the world's largest IPO's.... (the government expected value of which is north of $50B, their investment), and we kept the rust belt states from seeing 25-30% unemployment. Please explain how the alternative would have produced a better outcome.
    Last edited by upsideguy; 07-22-10 at 04:08 AM.

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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by upsideguy View Post
    Please explain how the alternative would have produced a better outcome.
    Especially since the reorganizations achieved effectively a virtually total restructuring. Gone are super strong unions. Gone are many unprofitable models. Gone are many legacy costs. Basically, Detroit was able to achieve what it wanted to do in a year what it couldn't do for a decade. The real problem is ensuring it doesn't fall back into that model of failure.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by upsideguy View Post
    OK... please describe what the world would look like right now if he had not.

    The baseline of your analysis: The government likely did not lose a dime on this transaction (and probably made money)... we still have an auto industry (with GM appearing to be a very viabrant company ready to re-float shares in one of the world's largest IPO's.... (the government expected value of which is north of $50B, their investment), and we kept the rust belt states from seeing 25-30% unemployment. Please explain how the alternative would have produced a better outcome.
    GM would have went bankruptcy and restructured and still be doing well. Chrysler has been struggling for many years and are still in business. Obama only saved the unions which what his goal was

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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by ptif219 View Post
    GM would have went bankruptcy and restructured and still be doing well. Chrysler has been struggling for many years and are still in business. Obama only saved the unions which what his goal was
    in a down economy, with the automakers filing bankruptcy, i don't see a whole lot of capital being loaned to them - unless it is by the government

    but maybe you know the alternative source of private capital they had access to, which would have eliminated the need for a bailout. please identify the potential source of the additional monies the automakers needed to successfully emerge from bankruptcy
    we are negotiating about dividing a pizza and in the meantime israel is eating it
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    Re: TARP Audit Questions Rush to Close Auto Dealers

    Quote Originally Posted by justabubba View Post
    in a down economy, with the automakers filing bankruptcy, i don't see a whole lot of capital being loaned to them - unless it is by the government

    but maybe you know the alternative source of private capital they had access to, which would have eliminated the need for a bailout. please identify the potential source of the additional monies the automakers needed to successfully emerge from bankruptcy
    Bankruptcy would have allowed re-negotiation of contracts. Obama stopped this because it would have hurt the unions.

    Chrysler has been in trouble for years but kept running

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