Too Big To Fail Or Too Small To Matter
What does it mean to a community to lose a business like a car dealership? Sadly more rural communities are coming to grips with the loss of cornerstone, mainstreet businesses thanks to the disproportionate closure of rural dealerships.
Dealerships are owned by independent business people who not only provide a product and service, but also own real estate and inventory. According to a Chicago Sun-Times article, dealerships generate an average of $280,000 just in local sales tax. Franchised dealers are a vital part of the local economy and community. They provide jobs, healthcare benefits and related business opportunities. And they contribute to other community institutions in myriad ways.
The closure of these dealerships is a severe economic blow to rural communities and counterproductive to rural economic development. Closing dealerships will not significantly affect the bottom line of GM or Chrysler. The dealerships pay for the cars they sell and assume a lion's share of the risk in the new car sales business. Firing the automakers' independent sales team is penny wise and pound foolish.
This decision epitomizes how federal policy can adversely impact rural communities by favoring the needs of industry and underestimating the importance of entrepreneurship. Congress should address the disproportionate rural dealership closures. And we should all learn the lesson that, if we invest in them, rural America's entrepreneurs and small businesses can contribute to America's economic recovery precisely because they are neither too big to fail nor too small to matter.