mathgeek

Why Chrysler Needs to Declare Bankruptcy

Felix, you are right on. While it is true that there is a strong association of dealers:

On Apr 24 02:22 PM Car Guy 1999 wrote:

> Ever heard of NADA? The automotive dealer's trade association is
> one of the oldest and strongest of all. Please reseach your subject
> before making blanket statements.

The problem is, that unlike the union, NADA can't enforce an agreement on its members, and unlike the bondholders, each dealer has wildly differently situated, and protected by one of 50 different sets of state franchise laws.

To those who wonder why this is a problem, there are two main reasons. The first is that closing down a whole model line requires payouts to dealers.... making the elimination of unprofitable brands prohibitively expensive. Further, excess numbers of marginal dealers hurts the amount of dealer-financed promotion, investments in service, and requires more inventory financing, all of which ultimately hurt the automakers.