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Chrysler Conspiracy: Dealership Closings Politically Motivated

There’s been a meme circulating the Internets the last couple of days that the 789 Chrysler dealerships that were suddenly closed were (1) hand selected by Barack Obama’s “car czar” and (2) overwhelmingly owned by Republican donors.

Doug Ross, who dubs it “dealergate,” seems to have been the chief initiator of the argument.  He cites a Reuters report that “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.”  Combine the fact that the closings were forced on the automaker by Team Obama and the fact that 92 percent of those chosen for closing donated to Republicans, and you’ve got a rootin’, tootin’ good conspiracy on your hands.

The same Reuters report, however, contains a statement from Chrysler that “:Our position is that the market can’t support the number of dealers that are out there” and “This has been our plan for more than 10 years to combine Chrysler, Dodge and Jeep under one roof.” Further, Chrysler denies Obama’s task force had any role in deciding which dealerships to close.

But they would say that, wouldn’t they?  After all, Obama and his czar controls their fate.

Megan McArdle interrupted her vacation to not that while her “operating assumption is that this story is a red herring” but that “the administration should answer this; it gives the appearance of Chicago-style corruption that is going to further taint a Chrysler takeover which has already left a number of people in the business and finance community wondering how firm the rule of business law is these days.”

Nate Silver suggests the obvious explanation for the discrepancy:  People who own new car dealerships tend to be Republicans.

It shouldn’t be any surprise, by the way, that car dealers tend to vote — and donate — Republican. They are usually male, they are usually older (you don’t own an auto dealership in your 20s), and they have obvious reasons to be pro-business, pro-tax cut, anti-green energy and anti-labor. Car dealerships need quite a bit of space and will tend to be located in suburban or rural areas. I can’t think of too many other occupations that are more natural fits for the Republican Party.

Using a someone crude but reasonable looking search of the FEC databases, he finds that,

88 percent of the contributions from car dealers went to Republican candidates and just 12 percent to Democratic candidates. By comparison, the list of dealers on Doug Ross’s list (which I haven’t vetted, but I assume is fine) gave 92 percent of their money to Republicans — not really a significant difference.

Steven Taylor adds a more generalized cautionary note that “numbers need context.”  Indeed.

UPDATEKevin Drum chimes in to defend Ross et al.

If George Bush’s administration had gone down this road, I’d want someone to watch them like a hawk too.  The crackpotty writing may be a source of amusement, and I have no doubt that these guys are, as usual, going to embarrass themselves in an Ahab-like quest to prove that Obama really did force Chrysler to target Republican donors — with the lapdog mainstream media covering up for him because, you know, that’s what they do.  But even so, I say dig away.  Even blind squirrels find nuts occasionally, and if the government is going to be running car companies, then this is exactly the kind of thing people should be watching out for.  That’s what opposition parties are for.

Indeed.  Of course, it would be even better if government weren’t running car companies.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. Eric Florack says:

    Nate Silver suggests the obvious explanation for the discrepancy: People who own new car dealerships tend to be Republicans.

    Well, they used to be, anyway. The ones left now, apparently are not.

    The whole thing smells even worse, though, in light of what one of Reynolds’ readers sends him:

    A reader notes something about “car czar” Steven Rattner: “Rattner is married to Maureen White, the former National Finance Chair for the Democratic Party.” The comment: “So one of the guys advising SecTreas on this thing is married to someone who used to be one of the people in charge of fundraising for the Democratic Party. This explains so much it’s scary.” Well, it bears a close look. ..

    At least, and likely deserves far more than this. One of the questions that needs be asked: Is there a connection between that relationship and where dealerships are being closed?

    By the way… here’s a list of the closings. Note particularly the number of closings in Republican dominated states like Texas and Florida.

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  2. PD Shaw says:

    Before the closings were announced, minority-owned dealerships were believed to be “at risk because many are small stores that offer only one of the company’s three brands, Chrysler, Dodge and Jeep.” Ultimately, very few were closed. One would assume that at least some African-American dealers would be pro-Obama?

    LINK

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  3. odograph says:

    To what degrees are these closings presented by mutually (previously) agreed contracts, and to what degree were they blocked by state law or local law?

    Dealerships are the most powerful entities in local politics, witness Victorville California bailing out out its dealers with local funds.

    I’m very surprised by the unstated part of this argument. Why can’t a manufacturer discard dealers? That is a free market, right?

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  4. quimby10 says:

    Note particularly the number of closings in Republican dominated states like Texas and Florida.

    This statement is meaningless without knowing the initial number of dealerships in each state. I will observe that TX and FL are the nation’s 2nd and 4th most populous states – and thus likely have many, many more dealerships than, say, Vermont.

    Again, numbers need context.

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  5. Dave Schuler says:

    Caesar’s wife must be above reproach. Government’s increased involvement with GM and Chrysler will necessarily be accompanied by scrutiny of the actions of the two companies that might not have occurred under other circumstances. Particularly on the part of those who are suspicious of just the sort of meddling that’s being alleged.

    It would certainly be interesting to know the objective criteria by which the dealerships to be closed were selected. That’s a level of scrutiny that Chrysler probably isn’t accustomed to but welcome to 2009!

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  6. sam says:

    Steven Taylor adds a more generalized cautionary note that “numbers need context.” Indeed.

    And Steve ends his reasonable piece with

    Of course I expect that such evidence will not dissuade those who are hellbent on finding a conspiracy here.

    Indeed. “Evidence? We ain’t got no evidence. We don’t need no evidence! I don’t have to show you any stinkin’ evidence!”

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  7. Dave Schuler says:

    Automotive News has been reporting for some time that Chrysler dealers in particular have been wondering about how the dealerships that got the axe were selected. They’ve got quotes from dealers who received notices that their contracts wouldn’t be renewed and some of them

    a) sell all three brands;
    b) have been selling a pretty fair volume;
    c) have been profitable;
    d) have never missed a payment;
    e) reportedly have done everything that Chrysler asked them to do.

    Under the circumstances it seems reasonable to ask what the criteria have been.

    GM, as usual, has been very opaque about this. To the best of my knowledge they haven’t published a list of the dealerships that are being eliminated. Which is certainly one way to avoid having people scrutinize the list.

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  8. Hoodlumman says:

    I believe the research is ongoing. Of course it isn’t being done by big media. Go figure.

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  9. Drew says:

    “Nate Silver suggests the obvious explanation for the discrepancy: People who own new car dealerships tend to be Republicans.”

    Got it.

    Entrepreneurial, capital risking, hard working dealership owners are naturally Republicans.

    And by inference, parasitic entities are Democratic?

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  10. John Cole says:

    I just hope they finally get a good look at his birth certificate, too!

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  11. Eric Florack says:

    (Shrug) I think that perhaps the biggest part of the story here, however is the MSM’s reluctance to investigate this stuff. I see Fox lookinyg at it, and it’s in the Washington Examiner, and I think The Atlantic has a blurb as well… all of which seem more focused not on the meme of why they were closing, but how they were trying to deal with being closed.

    I think enevtually that resistance will break down, but it hasn’t yet.

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  12. Alex Knapp says:

    Wait, so let me get this straight:

    1) About 90% of car dealers donate to Republicans.
    2) About 90% of the dealerships that have closed donated to Republicans.

    3) Therefore, the closings are biased against Republicans.

    Is that about right?

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  13. Steve Verdon says:

    So let me see….about 90% of auto dealership owners are Republican/donate to Republicans. About 90% of the dealerships slated for closing are/or donated to Republicans…if we were to draw a truly random sample of dealerships and close them about 90% would be/would have donated to Republicans.

    Yep, a very real conspiracy. I’m convinced. Now can we talk about the aliens from Zeta-Reticuli and their influence in getting Barack Obama elected. He is clearly a Zeta-Reticulan/Human hybrid and will do whatever his alien masters demand of him. And of course there is no evidence…but don’t you see that lack of evidence is itself evidence that Obama and his alien masters are hiding the evidence!

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  14. odograph says:

    From one of my quick, and not complete, google searches:

    State franchise laws make it onerous and expensive for manufacturers to force dealers out of business, but franchise contracts can be nullified in bankruptcy court. Chrysler LLC is taking advantage of bankruptcy to close 789 of its 3,200 dealerships by voiding their contracts, the company announced Thursday.

    How do you guys feel about that part of the equation?

    Do you think these state franchise laws are an appropriate free market solution?

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  15. PD Shaw says:

    The owner of three of those dealerships closed has reported that he has consistently sold at least 200% of Chrylser’s minimum quota (MSR). He also reports sales up the last year. Chrysler didn’t cancel one of his dealerships.

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  16. PD Shaw says:

    Under the circumstances it seems reasonable to ask what the criteria have been.

    Dave, according to the bankruptcy filings, the closings were supposed to prefer full-line dealerships, higher volume, more profitable dealerships. So, the facts you list are contrary to the represented goals.

    However, another Chrysler consideration was apparently market distance. Chrysler felt that too many of its dealers were competing against each other and cannibalizing potential profits. So you have two solid dealerships within 25 miles from each other, which do you close?

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  17. PD Shaw says:

    Steve Verdon, you’re good with numbers. What are the chances that the proportion of minority owned Chrysler dealerships cut is exactly the same as the proportion of minority owned Chrysler dealerships?

    154/3,181 (4.8%) = Total Minority Dealerships/ Total Dealerships

    38/789 (4.8%) = Total Minority Dealerships Cut/ Total Dealerships Cut

    The chances of this happening would be pretty good if minority ownership were a random feature of our society. But I don’t believe we’ve reached the promised land yet, evidenced by the fact that I got these numbers from Chrysler’s Manager of Network Diversity, whose job is partly to make sure that minority dealerships were treated fairly. He says the proportions just “happened” to be the same.

    LINK

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  18. [...] UPDATE: James Joyner [...]

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  19. just me says:

    Well I agree with the Drum update.

    If this had been Bush, the democrats would already be crying foul. Not sure how much there, is there, but the reality is that these closings are hurting dealers and their employees. The dealers paid for and bought franchises and now are losing their livelihoods-and I think it is worth looking into in order to see just why dealership A got the ax when dealership B didn’t, and who ultimately made the decision.

    I think the decision making process should be open, since the government is providing the bail out.

    And it isn’t that I think closing dealerships is a poor decision, although I am having trouble being convinced that two dealerships selling cars and making money for the company should have one of them closed because they are 25 miles apart. If the market means both are profitable, then why are they killing one?

    I would just like to see the process open. And if I was a closing dealership I would want to know why my dealership was the one chosen to get the ax.

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  20. Steve Verdon says:

    PD,

    7.434% that you’d get exactly 38 minority dealerships. The probability that you’d get 35 to 41 dealerships is 42.265% Assuming it was a random process where they went down the list of dealerhips and with probability 24.8% axed each entry.

    This data is so blah and normal looking that how any one can gin up any sort of conspiracy without excluding some relevant information is beyond me.

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  21. Phil Smith says:

    However, another Chrysler consideration was apparently market distance. Chrysler felt that too many of its dealers were competing against each other and cannibalizing potential profits. So you have two solid dealerships within 25 miles from each other, which do you close?

    Sounds like cause for an anti-trust action to me.

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  22. An Interested Party says:

    So…when do the impeachment proceedings begin…

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  23. PD Shaw says:

    Steve, my experience in Illinois is that there are no coincidences involving race, but YMMV.

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  24. PD Shaw says:

    I recommend Q and O for their posting on this (including the cautionary statements that the investigation is preliminary):

    Despite what Silver asserts (i.e. that the control group of non-closing dealerships should be examined), he does no such thing. Instead, he researches the Huffington Post’s Fundrace database for donations from car dealers to arrive at his decision that such occupation gives to the GOP at the tune of 8-1. However, Open Secrets arrives at a much different conclusion, especially over the long term, in which dealers only gave to the GOP at approximately a 3.5-1 clip. At those numbers, one would expect to find somewhere around a quarter of the closings to affect Democrat donors, instead of the 2.36% found thus far:

    LINK

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  25. Steve Verdon says:

    So…when do the impeachment proceedings begin…

    Exactly right! Being a mind-controlled puppet for the Greys is no laughing matter!

    And Joe Biden is secretly a transmogrified Saurian, an ancient intelligent race descended to the dinosaurs who unwittingly brought about the destruction of their kind by slamming an asteroid into the planet. All that is left are a small remnant who have returned to earth after escaping a quantum singularity one faction Saurians tried to use to leave the solar system, but which failed traping them in a giant sphere where time moved at a vastly slower rate.

    And again, the lack of evidence just shows that they are hiding the truth from us!!

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  26. anjin-san says:

    I am pretty sure acorn and FEMA are involved…

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  27. Pug says:

    Wait, so let me get this straight:

    1) About 90% of car dealers donate to Republicans.
    2) About 90% of the dealerships that have closed donated to Republicans.

    3) Therefore, the closings are biased against Republicans.

    Is that about right?

    That’s about right. Scandalous, isn’t it? Thank God the right-wing blogs uncovered this stinking mess. Another glorious win for bloggers.

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  28. An Interested Party says:

    Before any conservative is tempted to find amusement about anything that liberals protested during 8 years of Bush, they should pause for a moment and think about this ridiculous “conspiracy”…wow, political movements that don’t hold much power really do get desperate, don’t they…

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  29. JKB says:

    So what are we learning here? That when the government uses bully tactics and disposes of the rule of law, then all actions will be viewed with suspicion and attributed to the new unseen, unfair influence. Obama created this when he chose to avoid the open and established rules in order to reward favored parties.

    Is there something here? Perhaps, perhaps not, it doesn’t really matter. The damage is that every action, every decision, is suspect since the familiar rules have been thrown out. The reason we have transparent, long adjudicated rules is to maintain confidence that everyone is getting a fair shake. Making rules up as you go along will blow up a Monopoly game and it’s blowing up the real market.

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  30. sam says:

    The damage is that every action, every decision, is suspect since the familiar rules have been thrown out.

    Get real. Obama’s actions would be suspect regardless of whatever. Suspicion and arm-waving are all the Republicans have at this moment (and far more than likely, for many, many moments to come. Losers.)

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  31. Eric Florack says:

    Obama’s actions would be suspect regardless of whatever

    As if Bush’s weren’t for eight years? Comon, Sam, you’re better than that.

    The difference between them is while such charges thrown at Bush would result in all the cable news outlets going wall to wall with it, the MSM can’t even be bothered this time, comparatively.

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  32. Tlaloc says:

    reminds me of the Dilbert in which the boss is shocked to discover that 40% of all sick days are taken on either Mondays or Fridays.

    Innumeracy is possible the greatest problem in modern life, since it enables most of the rest of them.

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  33. floyd says:

    Aip;
    AH! You know impeachment never works…..

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  34. [...] Dealers Disproportionately Spared vs. Dealer Group’s 3X Higher Expectations | NewsBusters.org Chrysler Conspiracy: Dealership Closings Politically Motivated [...]

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