Neil Barofsky, a former assistant U.S. Attorney with degrees from Wharton and NYU law, is on my short list of intelligent life in D.C. His title as the Special Inspector General for TARP means his job is figuring out where the $700 billion in federal bailout funds went.
Barofsky's July 2010 report was critical of Obama's auto task force decision to cut dealerships by neglecting to consider the potential damage to associated jobs and small businesses. It blamed the Treasury for not considering (or doing so inaccurately) whether closing dealers would save GM any money. (Chrysler had not been urged to close dealers--that could be traced to Project Genesis, which sought to have dealers carry all the automaker's brands.) The report further questioned how dealers were targeted, since the scoring system wasn't evenly applied: GM claimed a wish to keep rural dealers without import competition. However, half the outlets it targeted for closure were rural, and some were kept because they were major parts dealers or were owned by women or minorities. Diversity plays well in D.C.
The White House predictably objected to the report, noting bigger-picture issues and their "shared sacrifice" policy, which sounds good from a podium. Seriously, though, how much bigger does it get than 6500 dealers with 350,000 employees? Car dealers are like any other business. Some are good and some bad, and I avoid them as much as possible. However, I agree that a lot of them got screwed in this whole reorganization.
By August, GM had concluded arbi-tration with its dealers. (I have to believe some will appeal based on Barofsky's report.) GM figures by press time it will have about 4500 dealers in 15 brand combinations, compared with recent levels of 6000 dealers in 87 combos. Combos are simpler when half your brands are gone, and, apart from Pontiac, few buyers of GM's jettisoned brand products seem to be returning to GM.
GM announced an agreement to acquire AmeriCredit for $3.5 billion in cash. GM's chief financial officer said, "With AmeriCredit providing us niche capabilities in leasing and non-prime financing, along with the continued strong support of Ally Financial and others for prime retail and dealer financing, we've set up a competitive solution for our financing needs." The White House approved this acquisition.
Two years after their Capitol Hill visit, the Nardelli/Wagoner bankruptcy doomsday scenario hasn't happened. Manufacturers are making money, or losing less of it, albeit propped up by fleet sales. There are no Chrysler electrics or hybrids, and GM's Volt will cost $41,000 ($10,000 more than GM's data suggests buyers are willing to pay for it). At least one dealer has added a $20,000 markup to that. Wealthier-than-average Volt buyers will qualify for a $7500 plug-in tax credit courtesy of the 2008's Economic Stabilization Act, itself a response to the sub-prime mortgage meltdown that started all this.