Experts: No auto bailout could crush local dealers

By Mike Boyer

Auto industry analyst and Miami University professor James Rubenstein says bankruptcy reorganization would be a short-term solution for U.S. automakers if Congress decides against a $25 billion bailout or other rescue measures.

Chapter 11 bankruptcy reorganization would lead to eventually liquidating General Motors, said Rubenstein.

“All it would do is punish the unions, shareholders and management,” Rubenstein said Monday as prospects were dimming for enactment of a bailout for the faltering auto industry before year’s end. Congressional Democrats and the Bush administration seemed headed for a stalemate.

If GM filed bankruptcy, he said, “Buyers would probably disappear completely because nobody would want to buy their cars.”

Rubenstein said he thinks the current Congress will enact only a limited bailout plan to get the U.S. auto companies into early next year, when President-elect Barack Obama and the new Congress will have to deal with the issue again.

Robert K. Riggsbee, president of Inside Media Inc., a Newtown-based media research, planning and buying agency said even with a bailout of GM, Ford and Chrysler, some local auto-dealer franchises are not going to make it.

“Smaller dealerships without scale of economy, they’ll be the first to feel the impact,” he said. “It’s going to be survival of the fittest.”

If a bailout fails, he predicted 25 percent of the region’s new car and truck dealerships would go out of business.

Rob Reichert, president of Kenwood Dealer Group said a GM collapse would certainly dent sales. But only two of its 14 dealerships are GM stores, so the company would be able to manage the crisis, he added.

Chris MacConnell of Thomson MacConnell Cadillac has already crunched some numbers on the worst-case scenario.

Sales of used cars, its servicing business and other parts of the car business it has diversified into will keep the GM dealer going even if the automaker collapses, he said.

David Wyler, president of Jeff Wyler Automotive Family, said a GM collapse would be devastating for the nation, but his company would survive through sales of the other brands it offers. The Wyler group sells GM cars at three of its locations but also sell cars made by seven other manufacturers.

If GM went out of business, “I’d sell a lot more Hondas and Toyotas,” Wyler said.