In an almost unprecedented case of federal bureaucratic meddling in what should be business decisions, GM and Chrysler have agreed to set up an "appeals" process to give dumped dealerships a chance to plead their case for retaining their franchises.

GM and Chrysler came under intense pressure from Congress when they announced plans to close dealerships, largely because the National Automobile Dealers Association is one of the most powerful lobbying groups in the country.

In a terrifying instance of politically-motivated government intrusion into what should be a business decision, General Motors has agreed to reconsider its decision to close dealers as part of an agreement to stop Congressional legislation that would have required GM to keep dealers open.

GM has said it plans to shut 2,400 of its 6,000 dealerships as part of a plan to cut costs and streamline operations.

But back in June, Congress started second-guessing the decision and now it looks like GM will have reconsider a business decision because a Congress has decided to appease a very powerful lobbying group: car dealers.

It should not come as too big of a surprise, but American auto maker Ford Motor (NYSE: F) announced today that its sales fell by 5.1% in September.

Following this summer's widely popular "cash for clunkers" program, it was some what expected that demand would weaken during September as so many people had just recently purchased new cars to take advantage of the government program.

The past couple of months there has been a lot of news over the government's recent "cash for clunkers" program, which was wildly more successful than anyone could have imagined, but left dealer lots short on inventory. General Motors dealers are still dealing with low inventory and have requested more cars to meet recent demand.

According to the Detroit News, General Motors dealers have requested that the company ship as much as four times as many cars as the company had planned to build in October.

Everyone knew that the government's "cash for clunkers" program would be enticing to potential auto buyers, but no one, including the U.S. government could have predicted just how popular the program would be.

Auto makers and dealers have seen a vast response to the program, but now some dealers are starting to wonder when the government is going to keep its end of the deal, and have decided to remove themselves from the popular program.

With so many people rushing out to take advantage of the "cash for clunkers" program, American auto maker Ford Motor (NYSE: F) has announced that it will be significantly boosting fourth quarter production.

There has been a lot of debate over whether or not the "cash for clunkers" program is good for the economy, but there is little debate as to its popularity. The program offers up to a $4,500 incentive for people exchanging their old gas guzzlers in for newer, more fuel efficient vehicles, and has been much more popular than anyone could have imagined.

Last week I wrote that the congressional hearings on General Motors' plan to terminate dealerships represented the manifestation of the worst fears surrounding a government-controlled auto industry: managerial meddling motivated by political rather than economic aims.

Today Bloomberg reports that there's a very good reason for Congress's willingness to listen to the car dealers: "Automobile dealers have been among the biggest contributors to U.S. political campaigns over the past decade, surpassing all but two groups in donations. That $13 million investment may be paying off as the dealers get a lot of attention on Capitol Hill."

Detroit's big three automakers are meeting with federal officials this week to try and address the mandate of 30mpg trucks and 35mpg passenger cars by 2020 (and beyond). Most likely, Ford Motor Co. (NYSE: F), General Motors Corp. (NYSE: GM) and Chrysler (in the process of being bought by Cerberus Capital Mgmt.) will state and build cases that it will be very unlikely that such fuel-efficient cars and trucks can be made in such a short time. In fact, all automakers that sell cars and trucks in the U.S. need to come to a common front or this new regulation will be completely doomed (according to industry watchers). Moving outside the fuel economy arena, though, are there even bigger problems with U.S. automakers these days?

How about a complete surplus of dealers? The actual number of Ford, GM and Chrysler dealers, based on autos sold, is huge: GM has nearly 7,000 dealers, Ford has 4,200 and Chrysler has 3,700. Based on sales of domestic cars and trucks in the last few years and the increasing presence of Toyota Motor Co. (which is outselling almost every other manufacturer in the U.S.), these numbers -- almost 15,000 dealers -- seem a bit high. Sure, the big three are in the process of reducing the ranks of dealers to fit current (and projected) business needs as the personal transportation market continually changes, but it can't happen fast enough.

Compare this to Toyota, whose dealer count in the U.S. tops out at about 1,400 dealers, while Toyota vehicles are just as (if not more) popular than most domestic nameplates from the big three. What has Toyota done to keep its dealer count low while selling more cars? Responding to the market's needs a lot faster? You bet. Marketing itself as the most reliable and dependable automaker? Sure. Can the big three recapture business from Japanese automakers by thinning the ranks of dealers? That's a start, but it's not any more than that.