The rejected dealers, particularly the Chrysler Group dealers, deserve more than what they stand to get now. Chrysler took full advantage of federal bankruptcy law and is not paying for the value of the 789 rejected dealerships' franchises. The automaker says it will pay all in- centive and warranty rebates due dealers.
GM has allotted an average of $450,000 for its 1,350 closing dealerships, apart from incentives and warranty rebates, according to data in the congressional testimony of GM executives.
I am not minimizing the pain of other stakeholders. Bondholders, for instance, lost hard-earned money. And many GM and Chrysler executives lost pensions for which they had labored their whole careers.
But many dealers lost businesses that were in their families for generations. Many rejected dealerships were profitable. Owning a dealership is more than a job.
But with the bankruptcy deal already approved, providing compensation to dealers at this late date would open a can of worms.
Surviving on tax money, GM and Chrysler are loath to pay more. And the Obama administration's auto task force is being tarred by anti-government zealots for shoveling tax money to the two automakers. GM is receiving $50 billion of tax money; Chrysler, $12.5 billion.
Under legislation approved by the U.S. House of Representatives, rejected dealers at both automakers would be restored. But the bill was sharply criticized by the White House and is stalled in the Senate.
Also, providing stock to the dealers would upset other stakeholders, who would besiege the task force for a better deal than they got in Bankruptcy Court.
In short, unscrambling the eggs at this point is sticky if not impossible.
Still, the dealers have a just cause. And practically speaking, they are well-organized and aren't going away. What's needed is common ground that both sides can live with: stock for the dealers.