Schlafly Perpetuates Republican Car Dealership Closing Myth
In a June 2, 2009 Townhall blogpost, Phyllis Schlafly perpetuated a myth that is gaining traction in the conservative noise machine: that the Obama administration took a direct hand in GM and Chrysler car dealership closings and deliberately targeted dealerships that contributed to Republican candidates. This accusation is baseless. The Obama administration had no hand in deciding what dealerships would close, as GM and Chrysler CEOs have made clear. In addition, statistical analysis shows that car dealerships are overwhelmingly owned by Republicans, and more car dealerships that remained open are owned by Republicans than Democrats.
Schlafly Insists That The Closing Of Car Dealerships Was A Partisan Move By The Obama Administration...
Phyllis Schlafly: "Now we can see the icing on the cake for the politicians who use economic dictatorship to punish those who resist socialist planners. Nearly every one of the closed local dealerships had donated to Republican candidates, almost none was an Obama contributor, and some dealerships owned by Democrats are not getting the ax." [Townhall.com, 6/2/09]
...Despite GM, Chrysler, And The Administration's Claims That The Government Played No Part In The Dealership Closings...
GM And Chrysler CEOs Confirmed The Obama Administration Played "No Role In Picking The Auto Dealerships That Are Being Closed." According to The Detroit News: "Transportation Secretary Ray LaHood said Thursday the Obama administration had no role in picking the auto dealerships that are being closed by General Motors Corp. or Chrysler LLC. During a 40-minute meeting Tuesday at the White House with the CEOs of major automakers, LaHood said he asked the top executives at GM and Chrysler if they were forced to close dealerships. Chrysler wants to close 789 of its nearly 3,200 dealers by June 9, while GM has sent termination notices to 1,100 of its 6,200 dealerships in an effort to close them by October 2010. 'I asked (GM CEO Fritz Henderson) and (Chrysler CEO Bob Nardelli) if any of these folks were pressured to close X number of dealerships or do it at a certain time,' LaHood said during an appearance at the National Press Club. Both CEOs said no pressure was put on them, LaHood said." [The Detroit News, 5/21/09; emphasis added]
GM Said It Targeted "Underperforming" Dealers. According to MSNBC.com: "A day after Chrysler LLC said it was cutting 800 dealerships, General Motors Corp. on Friday told about 1,100 of its U.S. dealers their franchises will be terminated late next year. GM said the move targets 'underperforming' dealers with small sales volumes and markets in which they are not competitive." [MSNBC.com, 5/15/09]
Chrysler: "More Than Half Of The Dealerships Being Eliminated Sell Less Than 100 Vehicles Per Year." MSNBC reported: "Chrysler executives said Thursday the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half of the dealerships being eliminated sell less than 100 vehicles per year, they said, and account for 14 percent of U.S. sales." [MSNBC.com, 5/15/09]
Chrysler And GM Closed Dealerships In An Attempt To Increase Competition And Drive Up Prices. According to MSNBC: "Both Chrysler and GM say they are cutting the number of dealers because they have too many outlets that are too close to each other, and the competition drives down prices." [MSNBC.com, 5/15/09]
WSJ: "Years Of Declining Sales Have Left Both GM And Chrysler With Many More Dealerships Than They Need." According to the Wall Street Journal: "Years of declining sales have left both GM and Chrysler with many more dealerships than they need. As a result, their dealers often compete with each other for customers, hurting their profits. Most of the GM dealers selected are 'hurting, losing money and in danger of going out of business anyway,' Mr. LaNeve told reporters. 'It's a move that people could argue should have been taken years ago.'" [Wall Street Journal, 5/16/09]
...And Statistical Analysis That Shows The Argument Is Fundamentally Flawed
Car Dealers Contributed Overwhelmingly To Republican Candidates - Among The Dealerships That Chrysler And GM Closed, AND Among The Dealerships That Remained Open. According to statistician Nate Silver at FiveThirtyEight.com: "Overall, 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. There's no conspiracy here, folks -- just some bad math. 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. Unfortunately, while we are still a nation of drivers, we are not a nation of dealers." [FiveThirtyEight.com, 5/27/09, emphasis added]
News Flash: The Myth That The Obama Administration Picked Republican Car Dealers to Close (It's Called a Control Group, People)
I agree that it would be outrageous if the government decided what car dealerships to close based on politics. So I decided to look into it. Thankfully, it seems like this was just a rumor that got blown out of proportion.
