The New G.M.: A Green G.M.?

So, G.M. is going into bankruptcy, and the government’s going to own a big slice. Yep.  Please raise your hand if you’re surprised.  OK, seeing no hands up, let’s move on to what’s really interesting here: who exactly is going to be running G.M.

I think the answer lies in the video above.  No, not just in the president’s remarks, where he says that he won’t be making the decisions — in the people who are in attendance at the remarks.  Namely, in his auto task force.

So who are all these people standing with him?  Well, from left to right, I spot:

Christina Romer, Chair of the Council of Economic Advisers
Stephen Chu, Secretary of Energy
Hilda Solis, Secretary of Labor
Barack Obama — what’s that guy do?
Gary Locke, Secretary of Commerce
Ray LaHood, Secretary of Transportation and Natty Handkerchiefs
Peter Orszag, OMB Director

Next row:
Austan Goolsbee, member of the Council of Economic Advisers
Larry Summers, director of the National Economic Council
Carol Browner, assistant to the president for Energy and Climate Change
The Mayor from Spin City Jared Bernstein, Economic Adviser to VP Joe Biden

Back row:
Ron Bloom, senior adviser at Treasury
Gene Sperling, counselor to Geithner and member of the CEA
Ed Montgomery, Director of Recovery for Auto Communities and Workers
Steven Rattner, who I believe to be the Car Czar and possibly also the Worst Tie Picker in history

Not pictured: Tim Geithner, who’s in China, and about six other second-tier members of the auto task force, including the 31 year old that the New York Times seems to think is running this show, Brian Deese.  I guess there’s only so many people you can fit in the Grand Foyer.

Image means a lot in Washington.  Obama may be saying, today, that the government is going to keep its nose out of the new G.M., but we’re still a few months away from that new entity, and everyone standing behind him will have a say in what it looks like.

So what I’m most interested in here is that two people — Chu and Browner — are present from the energy/environment side.  The way the administration has tied the success of the automotive industry to the cause of the environment is kind of fascinating.  Chrysler is being pushed toward smaller, more eco-friendly models, and now it seems inevitable that G.M. will be pushed that way, too.  These people — this task force — is built to do exactly that.

In case you’re wondering, as I did, who President Bush brought out with him when he announced the auto bailout, here’s the answer:

Bush stood alone and couched his discussion of the loans in almost completely business terms.  He made no mention of the companies changing to fuel efficient models or of any goal to achieve energy independence, as Obama did in his speech.

I kind of like the new crowd.

G.M., Chrysler Announce Thousands of Dealership Cuts

It hasn’t been a good year for car dealerships.  Gas prices skyrocketed, meaning more people were eyeing the bus and the bike; the economy downshifted, meaning more people were eyeing the electrical tape than the new-car circulars; and now two of the Big Three U.S. automakers have announced plans to cut a combined 3,158 dealerships in the next year or so.

G.M. made its announcement today.  The company plans to cut its network of dealerships by 2,369 (40 percent) by 2010.  These cuts will come from cutting off 1,100 dealerships that underperform, closing 500 dealerships that only sell the Pontiac, Saab, Hummer, and Saturn lines that G.M. is looking to get rid of, and by combining other franchises.  Right now, G.M. says this will happen in late 2010, when contracts expire, but if it files for bankruptcy, the closures might move up significantly — say, to this fall.  They haven’t yet announced which dealerships will close, but have said they’re focusing on underperformers, a logical way to make cuts.

Chrysler made its announcement yesterday, complete with a list of who’s going to close, where.  They’ve asked the court to cut off these contracts on June 9.  You can download the full bankruptcy filing [huge .pdf] and search for your home state, if you’re curious (I was). 

What you might find is that some dealerships aren’t closing outright — they’re just losing the Chrysler side of their business, as the Jeep-Volvo-Volkswagon dealer near me will be.  That’s still a big hit in product supply, of course, but the reports that say unambiguously that 3,000 dealerships are going out of business seem to miss the nuance: 3,000 dealerships will lose supply of brand-new G.M. and Chrysler vehicles, but the industry is so cross-pollinated now that it doesn’t automatically mean 3,000 dealerships will fold.  It will be a huge loss for these businesses, which will also (presumably) lose financing arrangements through GMAC, but it’s not the end of the road for every one.

Yet G.M. in particular seems to be ready to cut off its smallest dealerships, those that sell only a few dozen cars a year and are probably likely to be heavily tied to one brand.  While that makes perfect business sense, I wonder if won’t also contribute to the declining economy in the middle of the country, where, like the slogan says at one my old hometown car-dealerships, “a handshake is still a deal.”  Small dealerships are everywhere in the Midwest, and while they do a fair trade in used cars, there’s still a culture of The Car Dealer, the small town salesman who can talk you into a new Cadillac when you came in for a tire rotation, that seems sure to die.