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Posted by D. Sherman on Friday, November 28, 2008 at 11:15:16 :
In Reply to: Re: Chrysler Dealer going out of business posted by MoparNorm on Friday, November 28, 2008 at 08:43:02 :
If any of these companies goes bankrupt, they can continue to operate until they become profitable again. "Bankrupt" doesn't mean they shut the whole place down. It just means they don't have to pay their bills for a while. They could eventually fail completely, but many companies operate for a long time in a state of bankruptcy (airlines, for example). Another thing is that even if they do ultimately fail, all the pieces that are worth anything will get bought (cheaply) by some other company. If a factory is a good factory, somebody else will buy it and keep making vehicles in it. After Lehman Brothers went bust, all the pieces were quickly sold.
The auto executives have overstated their importance in the economy. They say 1 in 10 jobs depends on the auto industry, implying that all those people will be out of work if the big 3 go down. That's not true. People will still need just as much mechanic work, tires and batteries, and body work, no matter who's making the new cars. People will still buy new cars (if they can afford them) whether or not GMC is making them. Who really loses in a bankruptcy is the stockholders and the creditors. I'm not saying it isn't serious for a lot of banks, pension funds, insurance companies and individuals to lose money on their stocks and bonds, but that's different than saying everybody in the automobile and automobile service industry will be out of work. They won't be, so long as people keep driving.
As for the Chrysler dealer going out of business, I think Dave Smith motors here, which advertises itself as "The World's Biggest Dodge Dealer" can see the writing on the wall. They've just opened a big new tire, body, and accessory shop. If people aren't buying new cars and trucks, they'll still have to spend money to keep their old ones running, and he (actually Ken Smith these days) aims to intercept as much of that money as possible.
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