Dealers Angry, Optimistic; Regret Collapse of Corker’s Aid Plan

Dealer reaction to the collapse of the automotive bridge-loan legislation that would have seen a $14 billion rescue package going to General Motors Corp. and Chrysler LLC, ranges from frustration to pragmatism to admiration for Sen. Bob Corker (R-TN).

Republican senators’ hard stance on a rescue bill has frustrated dealers, whose support generally trends toward the GOP. According to the website opensecrets.org, car dealers have donated $50.3 million to Republicans since 1990, and only $15.8 million to Democrats.

Annette Sykora, chairman of the National Automobile Dealers Assn., admits the process has been difficult for the trade group’s constituency. Another dealer executive tells Ward’s in an email that he’ll have to change his political party now, a sentiment many dealers likely are feeling today.

One Alabama dealer, unhappy with the vote’s outcome, attributes Sen. Richard Shelby’s (R-AL) refusal to support the bailout legislation to overwhelming polls in the state against helping the auto makers. “He’s attracted to the media attention,” says the dealer.

Carl Galeana, owner of dealerships in Michigan, South Carolina and Florida, says he is “really disappointed from a retail standpoint with the Senate’s decision.” Galeana also expresses frustration with Sen. Lindsey Graham’s (R-SC) stance against the legislation, saying, “It’s obvious they (Senate Republicans) were going after the union.”

Sen. Mitch McConnell (R-KY) also voted against the bridge-loan legislation after reportedly indicating to dealers privately he would not oppose it.

“There’s no doubt we were disappointed,” says Jack Kain, owner of Jack Kain Ford in Versailles, KY, and a former chairman NADA. “However, we (U.S. auto makers) really will not be competitive until the union comes to the table. We need a level playing field to compete.”

Kain believes Corker’s plan made sense, praising his and McConnell’s efforts in trying to produce a bill that would help the domestic auto makers become more competitive.

Buck Baumann, president and owner, Baumann Auto Group, which consists of four GM and three Chrysler dealerships in northwest Ohio, also liked Corker’s plan, saying he has the “right attitude about it. He’s trying to get GM into a competitive position, and that’s what it’s about.”

Baumann expects the auto makers will get the money from the Troubled Asset Relief Program but does not believe the loan will help in the long term.

“It doesn’t respond to the problem,” he says. “If they gave General Motors $40 billion, I don’t think that answers the problem. I don’t know if there’s a loan out there big enough that’s going to help these manufacturers.”

Baumann thinks bankruptcy for the two auto makers might be a viable option, as “undesirable” as that may be. “As far as the public’s opinion of buying a product from a bankrupt company, it is an unknown,” he says.

Baumann predicts GM will survive and be in business for the “long haul,” but he is not as confident about Chrysler.

Import dealers also are feeling the heat from the bridge-loan collapse, says Cody Lusk, president-American International Automobile Dealers Assn.

“It makes a horrible problem worse for everyone,” he says. “We’re in such uncharted territory, but no one is immune from the fallout. We can’t really put a number on how drastic this could be.”

Galeana, meanwhile, is more optimistic now that the White House is saying it will step up and provide funding to the two distressed auto makers. “It’s better now that the President is doing this, anyway,” he says. “It means there will be less strings attached.”

– with Steve Finlay and Derek Stark

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