Chrysler and GM will shut down 1,900 dealerships nationwide by July, both automakers announced in letters to the affected businesses Thursday and Friday.
With those disappearing dealerships, more than 187,000 jobs could disappear, more than the number of people who work for the two car companies in the United States, the New York Times reported today. And the automakers aren’t done yet, the AP reports:
GM’s dealer cuts are part of the company’s plan announced last month to cut more than 2,600 dealers by 2010. The remaining cuts will come from closed Saturn and Hummer dealers, along with 400 dealers that the company expects will close voluntarily. Another 500 would be consolidated into other dealerships.
The GM dealer cuts are likely to have a much greater impact than Chrysler’s. While many Chrysler dealers also sell other brands and will stay open after losing their franchises, a large number of GM dealers sell only GM vehicles. So if their franchises are revoked, they run a greater risk of closing for good.
In both cases, the cuts will cost thousands of jobs, create holes in local tax bases, eliminate community pillars and create economic ripple effects across the country.
The event shines a light on a gaping hole in the bailout thrown to Detroit by the Obama administration in March: It only helps Detroit.
In November, I asked a friend whose father sells Dodge cars and trucks at a dealership in Westchester county, N.Y., what his father thought of the bailout plan. His response: “He doesn’t care. It’s not going to do anything for car sales. It’s probably just going to create a glut of cars at the back of the supply chain and drive down prices.”
The problem for industry: The bailout keeps the big three U.S. automakers afloat and payroll flowing to executives, operations and production employees who work directly for Chrysler, Ford and GM, but most of those who make their living from the U.S. auto industry work at dealerships that don’t make a living unless consumers are actually buying the cars the bailout allows Chrysler, Ford and GM to continue manufacturing.
As the automakers close franchises, expect the unemployment ranks to swell in a way that does more harm than the straight numbers would indicate. Auto dealerships provide the best paying jobs in many towns across America. Salesmen, floor managers and mechanics all command better-than-average salaries and wages. As these dealerships disappear so do some of the highest paying jobs in many towns.
This interactive map by the New York Times and Google lets you see the affected Chrysler dealerships. GM did not release a full list if affected dealerships, “leaving the decision to release information to individual business owners,” the AP reported.
Until the Obama administration and the industry do something about consumption, expect more auto dealers to close and some of the best jobs in many towns to disappear.