The dealer has, in effect, bought 200 cars and the manufacturer keeps him supplied with another 100 cars per month. In a year the dealership has bought (paid for) 100 cars/month x 12 months + 100 cars = 1300 cars. Does the dealership get stuck with leftover cars? Yes, that’s why you can cut such good deals on last year’s model.

Why would the dealership put up with such a lousy bit of financial shenanigans? Because the largest percentage of the dealership’s money comes from the sale of repair services. They also make a huge amount on used cars; which are a separate, yet dependant business.

As Lonsberry pointed out, if GM and Chrysler wanted to improve business they would get more dealers not fewer. But, dealers are granted territories so they won’t be eating out of each other’s repair business. Also, there are specialized instruments and tools required to fix various cars. GM and Chrysler design, build and (in the case of software) maintain these tools.

This means that you can’t always take your GM Crapo-mobile to just anybody. In addition, there are dealer only parts which, even if GM and Chrysler make them available to the secondary market, aren’t profitable for anybody else to carry. How will poor parts availability affect sales? Ask Hudson, Studebaker or Packard that question.

Obama has forced the car companies to cut off their future financing. He therefore gains complete control as it takes millions of dollars to set up a dealership. Who will take that risk if the government might order them closed?

On the good side, do you think the several hundred-thousand of newly unemployed workers are going to vote Democratic in 2010?

American made is what matters most to the American economy. Prosperity comes from local profits. Not those shipped overseas.

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