Dealer tradeoffs

In some cases, closing local dealerships to cut costs may be a bad trade-off for GM and Chrysler.

It would seem that the top priority for any manufacturing business would be to encourage the sale of its products.

With that in mind, the decisions to close so many Chrysler and GM dealerships is curious. In a bankruptcy filing designed to financially stabilize its operation, Chrysler named 789 dealerships slated for closing. GM, still trying to reorganize its company without going into bankruptcy, has announced the closure of about 1,100 dealerships. Neither company has been particularly forthcoming about what criteria were used in their closing decisions, but some of their choices seem questionable.

One goal Chrysler did acknowledge was to reduce the number of dealerships in some metropolitan areas. Having too many dealerships too close together left local dealers competing against one another without increasing overall sales. The closing of Chrysler dealerships in Overland Park and Mission, Kan., and Raytown, Kansas City and Harrisonville, Mo., apparently reflected that strategy.

Chrysler officials in Detroit may have thought that Lawrence’s Jim Clark Motors also should have been included in the metropolitan Kansas City cuts, but, if so, they are misreading the market. Chrysler customers might be willing to drive to Kansas City or Topeka to purchase a vehicle, but most don’t want to have to drive that far for ongoing maintenance or warranty repairs. In a market like Lawrence, where customers have many other dealer choices, the advantage of having local support for their purchase is likely to tip many buying decisions.

Chrysler and GM also will lose a significant buying advantage in many smaller towns where their dealership may have been the only one in town or one of two or three.

The late Jim Clark and his successors have been good for the automobile business and good for the Lawrence area. It is a shame officials in Detroit either do not know or do not appreciate the good job over many years that Jim Clark people have done for Chrysler and Lawrence.

Many communities are mourning the loss of their Chrysler or GM dealerships because it means lost convenience, lost jobs and lost sponsorship and support for community activities. Corporate leaders for the companies can’t be as concerned about those factors as they are about saving their company for the dealers that remain. It’s a business decision.

Providing support to fewer dealers will save the automakers some money, but at least in cases like Jim Clark Motors, the lost sales revenue may make closing dealerships a bad tradeoff for the company.