To date, noone has persuasively explained why car dealerships are being closed. Economics 101 and Business 102 would tell you to do the opposite, unless you are trying to cause the companies to fail.

The automobile manufacturers do not own the dealerships. The dealers are independent operators who (a) buy an inventory of cars from the manufacturers with their own funds, (b) sell to retail customers from their inventories, and (c) handle after-sale service.

GM and Chrysler have no financial stake in this part of the business; they just make cars and sell them to the dealers. So all of the sales effort is provided AT NO COST to the auto makers.

A dealer closes because U.S. Auto decides not to sell it any more cars, resulting in less marketing and sales effort for their products. There are fewer sales personnel working to sell the manufacturer’s products. Closing a dealer generates no cash for U.S. Auto—they do not own the business or its facilities—it just lowers the number of units sold.

Some argue that by reducing the competition between dealers that cars will sell for a higher price and this is the goal. While this might auto makers them increase the wholesale price to the remaining dealers (the only way this will help GM), it will also reduce the demand. Higher prices lead to fewer sales.

This must be what they are after: lower sales. I can think of much better uses for the billions of our dollars being spent to drive the car companies into the ground. Ruining GM and Chrysler: that could be done for free by just cranking up the CAFE standards. Oh, yeah, they just did that too.

So where is the authority to do this in the Constitution?