As Dealerships Sink, Towns Suffer

In 23 years, Bruce Hamlin has never seen the car business crash this hard, this fast. Three years ago he was selling 130 cars a month at his Chevy dealership in Southern California. Now, with business down 50 percent, he barely moves 60, CBS News correspondent Ben Tracy reports.

"And it just keeps getting a little bit worse month after month after month," said Hamlin, who owns the dealership.

Nationwide, 750 dealerships have already closed this year and 150 more are expected to shut down by year's end, putting nearly 40,000 employees out of work.

When a dealership closes its doors, it's not just about the jobs lost at the car lot. It's about everything else the community loses along with them.

New and used car sales are the single-largest source of sales tax revenue for almost every city, county and state government in the country. In Los Angeles for every $28,000 car sold, the city takes in about $560 in tax revenue - a total of $80 million each year. Now with auto sales dropping, so is the revenue and that means …

"Less fire and police protection, less road maintenance, libraries closing. It can be extremely catastrophic," said Laura Chick, Los Angeles' city controller.

Car dealers are often the largest source of ad revenue for local TV stations, radios and newspapers.

"Not only do they spend a lot of money, they spend it frequently and throughout the year," said media analyst John Rash.

But this year, dealer ad spending could drop by $3 billion.

And then there's charity - everything from hospital donations to sports teams. A little league stadium in Sanford, Fla., can't be finished because it lost a $50,000 sponsorship from a local Chevy dealer that shut down.

"I feel bad for the kids who haven't been able to play baseball for two years," said George Pihakis, the president of the Seminole North Little League.

But the road is the roughest for those just trying to make a living.

"Every industry has peaks and valleys, but man, this valley seems to be about as low as you can go," said Matthew Gunderson of the Orange County Automobile Dealers Association.

And it could be a long drive back up the hill.
  • Ben Tracy

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