The news is full of stories about auto dealerships closing and filing for bankruptcy, such as this one on Bloomberg:
General Motors Corp. said it may lose as many as 500 dealers in its home market this year, an increase from 350 last year, as the largest U.S. automaker works toward a goal of cutting 1,700 by 2012.
I am quietly smiling to myself reading these stories. Why? I have a long memory.
Almost a decade ago, the dealerships mounted a unified effort to screw consumers by preventing auto manufacturers from selling direct to consumers via the Internet. Reports such as this one document how, in the late ‘90s, dealerships convinced state legislatures to tighten regulations that prevented direct-to-consumer sales. These laws have kept the sales of new cars in the dark ages, insuring that consumers will continue having to pay the high cost of the middlemen in order to get a new car. Meanwhile, used car sales over the Internet have exploded.
I still remember being disgusted by the actions of the dealerships as it was all happening. So, as I think of all the money wasted on pointless middlemen who propped up their business model through lobbyists and legislation, I only hope that every car dealership that took part in these lobbying efforts goes under. Once they do, maybe we can get these ridiculous laws repealed and let car buying enter the 21st Century.
It’s nice to see a tiny bit of justice in the midst of the bailout craze.
Filed under: Economics, News, Politics Tagged: | auto dealerships, car sales, economy
