The "Little League Effect" of Chrysler, GM Dealer Closings

Even if it’s healthy for the auto industry long-term, Chrysler and General Motors closing thousands of dealerships will create a huge amount of collateral damage to Main Street institutions like Little League Baseball and local newspapers.

Love them or hate them, car dealers are the go-to donors for local causes and local sports teams, not to mention keeping newspaper advertising in business almost singlehandedly.

GM confirmed today it plans to close 2,369 dealerships by the end of 2010. That will take GM from 5,969 stores today to approximately 3,600. GM today began contacting about 1,100 “very small’ dealers, and/or dealers it considers to be underperforming, to advise them, “GM does not see them as part of its dealer network on a long-term basis.”

Chrysler earlier this week started a similar process, to close almost 800 dealerships. The National Automobile Dealers Association is predictably outraged. The auto dealer association has launched an ad campaign protesting “drastic” dealership closings, plus an intense but almost certainly futile lobbying effort to stem the tide.

“While NADA understands the realities of the current marketplace, we also know that dealers didn’t cause the situation that Chrysler finds itself in today,” the dealer organization said on its web site.

There probably isn’t a car dealership in America that’s not lined with photos of local teams for baseball, softball, soccer, swimming, dance, you name it. Is it self-serving? Sure. You never know, maybe Mom and Dad will be more likely to buy a car from one dealer over another, if that dealer sponsors Junior’s Little League team. If nothing else, the T-shirts keep the dealer’s name in front of people.

My friend David Kiley reminisced recently about participating in a dealer-sponsored Punt, Pass and Kick competition, in his businessweek.com blog. There must be a million stories like that.

Joni Mitchell certainly didn’t have car dealers in mind when she sang this, but, “Don’t it always seem to go that you don’t know what you’ve got ’til it’s gone?” Local fundraisers will be singing that tune. Main Street is going to miss those “very small” dealerships, even if by corporate standards they were “underperforming.”