Shimkus warns that closing auto dealerships can further harm economy
This article first appeared in the St. Louis Beacon, May 17, 2009 - U.S. Rep. John Shimkus appears to be the first area member of Congress to publicly question why General Motors and Chrysler are being allowed to eliminate, between the two of them, thousands of local auto dealerships.
Shimkus, R-Collinsville, is among several dozen members of the U.S. House who have co-signed a letter to the Department of Transportation that raises their concerns. Also signing the letter: Rep. Blaine Luetkemeyer, R-St. Elizabeth.
Said the letter, in part:
"We are writing to express our serious concerns regarding the demands by the Presidential Task Force on the Auto Industry for the rapid and potentially disorderly elimination of thousands of Chrysler and General Motors dealerships. This action, if implemented, could put approximately 150,000 people out of work. Since these dealer reductions and its ripple effects would have a serious and adverse impact on the United States, we would like to ask that you revisit the forced closure of thousands of dealerships.
"To justify these job losses, the Task Force is apparently relying on a misperception that new car dealers create a cost burden to auto manufacturers. This is not true, as on average, about 90 percent of an automaker’s revenue comes from dealers purchasing the automakers’ vehicles. Far from saving money, a rapid reduction in dealerships would further reduce GM’s and Chrysler’s revenue and market share...."
"I have talked to affected Chrysler dealerships in and around my district," Shimkus said in a statement. "I know they are concerned for their employees and with the disregard Chrysler is showing them as a business partner. In addition to this letter, I plan to follow-up with another letter of my own that addresses some of the specific concerns relayed to me by the dealerships."
"Another factor to consider is the loss of local tax revenues to communities where dealerships are forced out of business," Shimkus added. "There has been a natural reduction in dealerships over the last year, but I don't see how canceling dealership agreements saves the auto companies as much money as they claim. These dealerships make them money."