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March 6, 2010

Government Motors won't drop 600 dealerships

J. Robert Smith
General Motors, a partially owned subsidiary of the federal government, has decided to reinstate 600 less than profitable dealerships to its dealers' roster. In a Washington Times article, a GM spokesman cited litigation costs chiefly as the reason.

"By doing this we save a lot of time, energy and dollars," said Jim Bunnell, GM general manager of network support, saying the company wished to avoid a "very large arbitration process."

But the real reason for the dealership reinstatements may have less to do with cost than the dynamics of big government and old fashioned politics.  The Washington Times further reports:

Congress-brokered talks between dealer groups and the automakers began in September. But those talks stalled over disputes about the review process for targeted dealerships and other issues. Looming over the fight has been the threat of federal legislation to deal with the closures. Lawmakers warned that if a deal wasn't reached, that legislation would move forward.

You can bet that all those hometown dealerships on GM's hit list have been kicking up plenty of dust and squawking to their congressional representatives about not only the "unfairness" of losing their franchises, but about the adverse impact that closing their dealerships will have on their communities.  Never mind that taxpayer dollars are propping up most of the GM shebang.

And lean and mean may be the way of profitable private enterprise ventures, but when is it ever the way of government or any venture government gets its hooks into?  The iron law of government is that bureaucracies grow, not shrink; they become more cumbersome and costly, not the other way around.

The dealer reinstatements come on the heels of GM announcing the recall of 1.3 million vehicles for power steering problems and GM CEO Ed Whitacre, Jr., announcing that his struggling company would change its marketing team for the second time in three months. 

Being too big to fail, GM will continue as a ward of the state in perpetuity, if President Obama and his Democrats have their ways.  Like Amtrak, expect more taxpayer subsidies in the future, and score another one for statism. 

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