Decision to Close Dealerships Based on Race, Gender, Politics?

Meredith Jessup | July 22, 2010 1:59 PM

A new report out from the Inspector General suggests that some GM dealerships received preferential treatment during the company's bankruptcy/bailout downsizing of dealerships because they were owned or operated by a minority or a woman:

GM officials attributed these inconsistencies primarily to a desire to maintain coverage in certain rural areas where they have a competitive advantage over import auto companies that are not typically located in rural areas, although ultimately close to half of all of the GM dealerships identified for termination were in rural areas. Other dealerships were retained because they were recently appointed, were key wholesale parts dealers, or were minority- or woman-owned dealerships. [emphasis mine]

If I was someone who worked at a dealership that was forced to close while others weren't simply because they were owned by a minority or a woman, I'd be pretty ticked right about now...

Some dealership closings forced by the administration were based on politics. The report states:

[E]xperts said that while metro areas were oversaturated with GM and Chrysler dealerships and reductions were needed in these areas, this was not the case in rural areas where GM and Chrysler had an advantage over their import competitors. [...]

Although sales volume in small towns may be lower, the cost of operating dealerships in small towns is lower as well. In addition, closing dealerships in small towns could ruin the "historic relationship" that GM has had with residents in small towns and force buyers to drive to metro areas, where there are more competitors. In the worst case, the loss of market share in small and medium-sized markets could "jeopardize the return to profitability" for GM and Chrysler, the (the Center for Automotive Research) representative said. Representatives from the National Automobile Dealers Association also concurred that dealership terminations would cause GM and Chrysler to lose market share in rural areas. [Emphasis added.]

Regardless, the report concludes that "ultimately close to half of all of the GM dealerships identified for termination were in rural areas."

As American Thinker points out, it's interesting to note that in 2008, Barack Obama lost the vote in the country's 1300 rural counties by nearly 80%.

Is it merely a coincidence that dealerships in rural areas took a disproportionate hit while Obama's base--the nation's metro areas--stayed open for business?