Auto Dealer Franchises Close

The closing of large numbers of auto dealer franchises doesn't make any sense to me. I mean, these are the guys who sell the cars. They are franchises, they are not owned by the manufacturers, why would you close them? All you are doing is reducing the number of places where someone can buy one of your cars. Anyway, it bugged me so I started looking into why it was done. You would not believe how much useless information I had to wade through to come up with this little bit:

Lastly, GM and Chrysler are using the bankruptcy process to shed hundreds of small or money-losing dealerships. GM plans to drop 2,600 of its 6,000 dealers and Chrysler 789 of its 3,200.

From an article in the Wall Street Journal. OK, "money-losing dealerships" I can sort of understand. Maybe there is some kind of charge back arrangement where the manufacturer has to pay some money to dealers who can not make a go of it on their own.

Small dealers I can also sort of understand. Given the bureaucracy inherent in large corporations, I can see where a small dealer could cost more in administration than it was worth. In this day and age of fancy computer systems, it shouldn't, but if GM is as much like a dinosaur as it's size suggests, then it is understandable.

Evidently I am not the only one in the dark:

Hoyer, a Maryland Democrat, said that neither the White House nor the companies themselves had offered any economic rationale for the closing of the dealerships.

Also from The Wall Street Journal.