Obama playing politics with Chrysler dealers? (Update)

Some interesting stories have been popping up lately which you probably will not hear on the evening news since they do not fit into the media’s agenda of covering for this administration. It seems that many of the closing dealerships are raising issues ranging from state protection of franchises to federal coercion of Chrysler to close certain dealerships.

This story from Reuters:

NEW YORK, May 26 (Reuters) – A lawyer for Chrysler dealers facing closure as part of the automaker’s bankruptcy reorganization said on Tuesday he believes Chrysler executives do not support a plan to eliminate a quarter of its retail outlets.

Lawyer Leonard Bellavia, of Bellavia Gentile & Associates, who represents some of the terminated dealers, said he deposed Chrysler President Jim Press on Tuesday and came away with the impression that Press did not support the plan.

“It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers,” Bellavia said. “It really wasn’t Chrysler’s decision. They are under enormous pressure from the President’s automotive task force.”

He added the government task force, which he criticized for having no members with retail experience was, in effect, attacking U.S. entrepreneurs.

“What is the next task force? Shoe stores? Pizzerias?” Bellavia said at an event in Manhattan to publicize the dealers’ concerns ahead of a bankruptcy court hearing.

This would appear as though it was the Obama administration, not Chrysler’s, which ultimately chose to close dealerships and, possibly, which dealerships to close.

Beyond this story is where the plot thickens. There are other allegations, being compiled mainly of anecdotal evidence, which suggest that the dealer closings were made by the Obama administration on a political basis, not as a sound business decision.

Doug Ross explains:

A tipster alerted me to an interesting assertion. A cursory review by that person showed that many of the Chrysler dealers on the closing list were heavy Republican donors.

To quickly review the situation, I took all dealer owners whose names appeared more than once in the list. And, of those who contributed to political campaigns, every single one had donated almost exclusively to GOP candidates. While this isn’t an exhaustive review, it does have some ominous implications if it can be verified.

However, I also found additional research online at Scribd (author unknown), which also appears to point to a highly partisan decision-making process.

Consider the partial list of Chrysler dealership owners, listed below. You’ll notice that all were opponents of Barack Obama, most through sponsorship of GOP candidates and organizations, but a handful through Barack’s Democrat rivals (Hillary Clinton and John Edwards in 2008, for example).

• Vernon G. Buchanan: $147,450 to GOP candidates and organizations
• Wallace D. Alley and Family: $4,500 to GOP.
• Robert Archer: $4,600 to GOP and conservative causes.
• Homer S. Higginbotham and Family: $2950 to GOP.
• James Auffenberg and Family: $28,000 to GOP; $6,000 to one Democrat candidate.
• Michael Maroone and Family: $60,000 to GOP; $8,500 to two Democrat candidates.
• Jerome Fader: $6,500 to Democrats; $2,500 to Independent Joe Lieberman.
• Stephen Fay and Family: $13,500 to GOP.
• William Numrich: $20,000 to GOP.
• Robert Carver: $10,000 to Democrats including $1,950 to Hillary Clinton, nothing to Barack Obama.

• Robert and Linda Rohrman: $24,000 to GOP.
• Frank Boucher, Jr. and Family: $18,000 to GOP, $1,000 to one Democrat candidate.
• Scott Bossier: $4,300 to GOP.
• Todd Reardon: $17,000 to GOP; $2,000 to one Democrat candidate.
• Russ Darrow and Family: $78,000 to GOP.
• Bradford Deery and Family: $24,700 to GOP.
• Charles Gabus and Family: $30,000 to GOP.
• Brian Smith: $15,500 to GOP.
• Michael Schlossman: $14,000 to GOP; $14,000 to three Democrats ($12,500 to Sen. Russ Feingold).
• Don Hill: $11,000 to GOP; $12,800 to conservative incumbent Rep. Heath Shuler.

• Don Miller: $2,000 to GOP; $1,000 to Feingold.
• Eddie Cordes: $2,150 to GOP.
• Robert Edwards: $1,100 to GOP.
• James Crowley: $19,100 to GOP.
• Stanley Graff: $2,200 to John Edwards (2008 Presidential Run); $500 to GOP.
• John Stewart: $10,500 to GOP.
• John Fitzgerald and Family: $4,600 to John McCain (2008); $2,000 to Hillary Clinton (2008); nothing to Barack Obama.
• William Churchill and Family: $3,500 to GOP.
• Thomas Ganley: $9.450 to GOP.
• Gary Miller: $20,000 to GOP.

• Kevin and Gene Beltz: $18,500 to GOP.
• Arthur Grayson: $14,000 to GOP.
• Eric Grubbs and Family: $26,000 to GOP.
• Michael Leep and Family: $19,500 to GOP; $4,800 to three Democrats including Sen. Evan Bayh.
• Harry Green, Jr.: $10,000 to GOP.
• Ronald Hoover: $5,250 to GOP.
• Ray Huffines and Family: $18,500 to GOP.
• John O. Stevenson: $1,500 to GOP.
• James Marsh: $8,200 to GOP.
• Max Pearson and Family: $112,000 to GOP.

I have thus far found only a single Obama donor (and a minor one at that: $200 from Jeffrey Hunter of Waco, Texas) on the closing list.

Chrysler claimed that its formula for determining whether a dealership should close or not included “sales volume, customer service scores, local market share and average household income in the immediate area.”

In fact, there may have been other criteria involved: politics may have played a part. If this data can be validated, it would appear to be further proof that the Obama administration is willing to step over any line to advance its agenda.

It bodes poorly for America and the rule of law.

There could be other explanations. For example, without a full sampling of the political donations of every single Chrysler dealership in existence, it’s impossible to say if this is an exception or the norm of car dealership political leanings. Is it possible that car dealerships, being entrepreneurial in nature, lean Republican more often than not making it impossible not to close dealerships which donate to Republicans? I can’t answer that.

Since I cannot say for certain, this part of the story is purely speculation and, until verified, cannot be relied upon as fact. I just thought it was interesting to share given the secrecy and questions surrounding the Obama administration’s control of the dealership closings. The dealership owners have been raising the most questions since they have been given almost no explanation whatsoever for why their specific dealerships were chosen.

What is interesting is how I have heard numerous stories from owners and employees of dealerships which are among the top sales earners for Chrysler. Thus, one has to wonder why they’re being closed.

For example, many stories like this one:

As an employee of one of the affected dealerships… First, this isn’t just Chrysler’s decision. They were forced into bankruptcy by President Obama. When Chrysler emerges from bankruptcy the Federal Government will be a junior partner in the new Chrysler. This is SOCIALISM! Wake up people! This isn’t about business it’s about politics and control.

My dealership is in the top 125 out of the 3500 plus dealerships nationwide…yet we are on the list. We are not small nor are we rural. We are in a large major metropolitan area. Our new vehicle inventory alone is well over $4.0 million. Is that small? Secondly, Chrysler is already “shopping” for dealers to take over the open “points” (another name for franchise) left by the closed dealerships. Again, you think this is just business.

Lastly, and more importantly, every state has franchise law in affect that protect companies from this very thing – being forced out of business under the cloak of bankruptcy with out the benefit of due process. This is illegal!

If Chrysler is indeed shopping for new dealers in these areas, how can these closings make sense?

One more story from the APP:

Chrysler dealers will soon launch their legal opposition to the company’s plan to cut 789 dealerships in less than a month, arguing the company has asked for too much freedom from state laws protecting dealer agreements.

Michael Bernstein, an attorney with Arnold & Porter who represents the Chrysler National Dealer Council, said the dealers may offer a number of objections to the plan in U.S. bankruptcy court, and that the case will enter some uncharted legal territory.

“If there is going to be any rejection of dealers, it’s in everybody interests for the transition to be as smooth and painless as possible,” he said Friday, adding “anxiety and uncertainty are not productive.”

The decision by Chrysler comes as part of the automaker’s plan to sell most of its assets — including the 75 percent of its dealers it wants to keep — to a “new” Fiat-Chrysler venture.

Chrysler’s request goes far beyond just ending dealer contracts. It would bar an affected dealer from selling any Chrysler vehicle or part under warranty after June 6. Any payments or damages from ending the contract would be left with the “old” Chrysler whose liquidation won’t cover the liabilities it assumes.

But here’s the kicker in that story:

Bernstein said under bankruptcy law Chrysler would have to show how its “reasonable exercise of business judgment” led to the closing list. While the company cited a bevy of standards by which it chose dealerships, Bernstein said it was noteworthy that Chrysler didn’t cite costs.

“There’s no cost to Chrysler associated with dealers. Dealers are a source of revenue,” Bernstein said. “A lot of people were surprised by the number of dealers Chrysler is proposing to reject.”

Dealerships are small businesses operated under their own revenue streams. They simply license the Chrysler name like any other franchise. One then, has to question, why on earth some of the top sellers in some of the biggest areas are being closed?

I believe there is a lot more to this story we’re not even seeing yet and much more may come out in the days and weeks ahead as this all moves forward and some dealers begin heading to court for answers.

Update

Fox News has now weighed in on the question of whether the Obama administration and politics played a role in the Chrysler dealership closings and they find little to be concerned about:

A preliminary study by FOXNews.com found that the data do not support the charges. Among the dealerships set to close, 12 percent of a random 50 selected for review donated to Republicans and 8 percent to Democrats. Of the dealerships remaining open, 14 percent of a random 50 selected donated to Republicans and 10 percent to Democrats. In both samples, the average size of donations was similar for both parties.

According to the sample, one major factor in determining whether a dealership was closed or not was the size of the dealership, measured by the number of product lines carried (the four lines are Chrysler, Jeep, Dodge and Dodge Truck). The average store that will be closed in the FOXNews.com sample carries 2.5 of those product lines whereas the average store that will stay open carries 3.64.

A Chrysler representative said part of the decision on consolidating dealerships was to reduce overlap and have the remaining dealers sell all three company brands.

“It makes sense to have all three brands under one roof,” Chrysler spokeswoman Kathy Graham told FOXNews.com.

Conservative blogger Michelle Malkin suggested that more Republican-leaning businessmen gravitate toward the car dealership business. She added that many dealerships deserved to be closed down.

“In any case, it’s too early to start painting them all as victims of a politically motivated witch hunt,” she said before encouraging the bloggers to keep digging.

Keep digging indeed, nothing wrong with that until this is settled. My initial interest was sparked by dealers who say they were given little explanation from Chrysler as to why they were chosen given their large sales volume.

My other concern, as stated above, was that without further investigation into the entire sample of Chrysler dealerships, some things are simply coincidences. In truth, the unpopular position to state is that some dealerships probably had to be closed, and it isn’t a bad thing. My concern lies in how much influence the Obama administration had in making the closings.

The dealerships are still going to court on various grounds, we’ll wait to see if anything materializes and update accordingly.