GM and Chrysler Dealership Closings are Opposed by Congress

Both GM and Chrysler have recently emerged from bankruptcy as smaller and leaner companies. This was done in large part through the intervention and support of the federal government which saw to it that all the effected parties made the necessary concessions and liquidation was avoided. However this has come at a price. The government now has a majority ownership stake in both companies in exchange for the funding received by both companies in order for them to survive.

After both GM and Chrysler moved to close dealerships in order to streamline their respective operations, the US House of Representatives just passed a bill telling them to reopen them again. Actions like this can have damaging consequences for the following reasons:
1. GM and Chrysler have steadily lost market share to the foreign automotive companies and need to slim down their operations in order to achieve long term profitability.
2. Congress needs to understand that in order to nurture a strong and independent GM and Chrysler, they need to stop interfering in their business operations and second guessing the management. Both companies need to be allowed to either succeed or fail by themselves and away from government meddling.

It is understandable from the dealers viewpoint that they are loosing their livelihoods and jobs are being lost at each dealer that closes. However, for GM and Chrysler to survive and grow again they need to be smaller and leaner companies. This will be impossible if they have the same bloated structures that they previously had. Current projections show that 2009 annual vehicle sales will be 10.5 million as compared to 16 million back in 2007. With such reduced sales volumes all the OEM's need to be nimble in order to remain profitable until the economy recovers and consumers start buying new cars again.