Wednesday, December 16, 2009

Congress and the Auto Dealers

Here we go again! As many predicted, Congress cannot help but meddle in the auto industry, particularly given the government ownership stakes. Alex Taylor of Fortune writes:

"Last week, House and Senate leaders agreed to a proposal to give the right of arbitration to terminated GM and Chrysler dealers, which are said to number more than 2,000. In other words, Congress, after complaining that the two companies don't know how to make a profit, is imposing a new requirement that will make it more difficult for them to make a profit."ress

Dealer rationalization must occur for the American automakers to turn the corner toward a sustainable profit-generating business model. No one with any sense of how businesses and markets work would argue otherwise.

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