‘Dealergate’: UNA Economics Students, Professors Study Rationale Behind Chrysler Dealership Closings

Jul. 10, 2009

FLORENCE, Ala. – Is it business, or is it politics? That’s the question a group of University of North Alabama students and professors have asked regarding the selection of 789 Chrysler dealerships that are losing their franchise in the wake of the recent government bailout of the auto company. The group, with the UNA Center for Public Policy and Economic Research (COPPER), has researched the economics and political leanings of each of the counties impacted by the loss of these dealerships.

“We know the government is involved, but how much? To what extent?” said Dr. Jim Couch, a UNA economics professor involved in the study.

While Chrysler management has said that business considerations guided their choices, Couch said that U.S. economic history is full of reasons to take a closer look: For example, New Deal dollars going to swing-vote areas, IRS tax audits, EPA investigations, antitrust legal actions, even troops put in harm’s way during the Vietnam War.

Ultimately, the research team found several factors at work. “If a county’s unemployment rate was high, then the dealership in that county was more likely to get closed. Or if a dealership didn’t carry the full line of Chrysler vehicles, that was a significant factor, as well,” said UNA junior Lauren McCullough, one of 15 students who helped with the study.

“But in the back of it all,” Couch said, “there’s the variable that, as the vote in a particular county for Obama went up, those dealerships were more likely to remain open.”

While the team suggests that future research should include additional political variables, they also suggest that, “Based on the evidence thus far, the term dealergate seems warranted.”

Couch said the motivation to conduct the study was driven by sheer interest in the matter as well as the fact that “no one has done what we’ve done. Everybody has nibbled at the edges. I think we’ve got the best analysis in the country at this point on how the decision was made on which dealerships to close.”

INTERVIEWS OR COMPLETE STUDY AVAILABLE: For interviews or a complete copy of the study, contact Dr. Keith Malone, assistant professor of economics, at kdmalone@una.edu or 256-765-4402, or contact the Office of University Communications at 256-765-4225 or jlwoods1@una.edu.