As Dealerships Sink, Towns Suffer

CBS Evening News: From Jobs Loss To Schools To Little League, A Dealer Closing Doors Reverberates Far

(CBS)  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.

[baicas]

People would you quit blaming one party for this mess, both parties are responsible. As I have stated before, you are also responsible for keep voting the same durn people into office. No incumbents should be in office now after this last election, but you bozo''s elected them back in...so when the economy keeps going into the crapper you only have yourselves to blame for voting the same people back into office.

[lemonskink]

I''m sorry for all these people trying to lay the blame on the both parties. First, the Republicans controlled Congress for 12 years, 8 with Bush, this was before the Democrats started cleaning the clocks of these low-life Bushlamic Extremists. The blame lays squarely on the shoulders of Bush and his cronies. No other way to cut it. So drop it. Bush even said, "I''m sorry for the economy." He''s still retarded as ever, but will be a very rich *** in the future once the public forgets about him. They''ll have the bucks to groom more Bushlamics after Genna gets knocked up a few times by her frat boy man.

[incog-nito]

Automakers should sell the cars themselves, skip the dealers, and pass the savings to consumers. Give the customers just the options they want instead of loading the cars with useless expensive add-ons. America has become a land of middlemen instead of producers, whether it''s insurance or sales or simply paperwork. A nation''s real wealth can only be created by producing and adding value to material, not by sitting in the middle and skim off the top.

[jowand]

The blame lays squarely on the shoulders of Bush and his cronies. No other way to cut it. So drop it. Bush even said, "I''''m sorry for the economy." He''''s still retarded as ever, but will be a very rich *** in the future once the public forgets about him. They''''ll have the bucks to groom more Bushlamics after Genna gets knocked up a few times by her frat boy man.

Posted by Lemonskink at 08:08 PM : Dec 02, 2008

A Democrat controlled Congress just gave the banks about 300 billion in tax payer money which they refuce to put into the economy so people can borrow to purchase autos. You should call Nanci Pelosi and Harry Reid and ask them why they are not doing something to stop this, instead you''re just running your big fat Progressive mouth telling lie after lie.

[u-r-right]

These dealerships rode a nice cash wave for quite a while. They got away with $100 plus per hour labor charges for service. When times were good, they would see plenty who would pay $200-$400 for their "very impportant" scheduled maintenance service. Now the customers have found other alternatives through independent shops or do it themselves. Its really prety simple.

Same goes for their car prices. The MSRP joke, the wheeling and dealing, let me go talk to my manager shell game. Overpriced vehicles, mediocre standard warranties after the sale and bait and switch tactics. All the vehicles on the lot, loaded with unwanted options...sorry, must take delviery from dealer stock and oh, here, also pay this "prep" fee.

Maybe if they charged fair prices from the start, the dealers wouldn''t be in this mess.

[lmartink]

I can''t be sympathetic. There are too many slick used car salesmen out there, inhaling that white powdered nose candy, and stiffing the next customer who walks through the door for his next fix.

Good riddance. Besides, in this economy anyone who goes out and buys a new car needs their head examined. With so much of the financial crisis coming down on us, going into debt caouldn''t come at a worst time.

[mrmeatspin]

Posted by jbrown88881 at 07:44 PM : Dec 02, 2008
+ report abuse

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terrorism ENDS as soon as obama and his dnc crew steps in the white house..they will have a concert and poverty ends..just like in africa..

we will go back to driving 9mpg suvs ..back to eating buffets..back to open borders..we can put those blinds back on so we would not care or know how we get oil..or how GAP managed to give you such a discount on that shirt...

the normal status quo continues..

[albrightw]

With the kind of wages the car manufacturers are paying. And the ownership of two or three properties and several vehicles by junk head employees, put them out in the street and learn what''s like to actually earn a living.

[Scooter68]

Gotta laugh at the clueless ones still slinging the political dung.
How about a little reality folks. You''ve been buying a new car, on average every what 2-4 years? So the car dealers have been just eating it up. Now people can''t affort the new cars or they are just holding out an extra year or two and there you have it. Car sales drop like a rock.
Don''t blame it on politicians, look in the mirrors folks YOU have been the reason car dealers have done so well. You bought into their sales pitch and endulged yourselves and now your savings, if any are next to nothing and you are in economic distress. BLAME YOURSELVES AND YOUR GREED!

[merlgrey]

''Theyll have the bucks to groom more Bushlamics after Genna gets knocked up a few times by her frat boy man.''

that country club dweeb? not sure if hes man enough to do the job. shes prob gonna be spending some serious ball handling time with her tennis pro.

[ozarkbard]

NO BAILOUTS! LET THEM FALL!

[ramos937]

Long ago most dealerships also decided to carry Toyota, Honda, Nissen in addition to their domestic brands. The ones that did not do this are the ones suffering. Even so, what prevents the latter, even at this late date, from carrying the brands that do sell?

[omnibus66]

Many, if not most, people who buy a new car do it not because they need to, but to feed their ego. A used vehicle is always a more practical choice, but the slick car ads will convince you that you are far more likely to get laid if you buy a new one.

In order to survive, the automobile industry is going to have to totally change its way of doing business. From the type of vehicle they build, to the way they are marketed, to the pricing and quality of service, it all has to change.

If they don''t, they can kiss it all goodbye.

[neo269]

Instead of giving the incompetent automakers a bailout, the government should be making credit available for people who can''t buy cars.

[matrixrx2003]

There are way to many Dealerships in the first place. Let em Fail.

[dovestar]

Here''s an idea: Why not just nationalize the auto industry? After all the government has been telling automakers what to make for years and that has been part of the problem. I believe Buick already makes a car--the Opel, that gets 50 miles to the gallon. Guess what guys? They can''t sell it here because Nazi Pelosi and company won''t let them. And, really, isn''t government a whole lot more efficient than the private sector in running anything? Doesn''t Father Washington, who the Indians have been calling the Great White Father for years know best? Let''s see, Amtrack, the post office, Social Security, and Medicare come quickly to mind. Hmm, methinks that may not be such a hot idea after all.

[hitoyou11]

I did not see any of these dealers give any of us a break. Let them go down. Live on the street. You rip us all off when you could, now pay for it. NO MONEY.

[valentin73]

AH, POOR LITTLE RICH DEALER(S) [ALL ACROSS AMERICA]!!!

AMERICA IS NO LONGER DRIVING FORD & CHEVYs, THEY ARE DRIVING: TOYOTAS, NISSANS, BMWs, & MERCEDES BENZs,...

GIVE IT UP FORD AND GM!!!!!!!!! TURN OFF THE ASEMBLY
LINE LIGHTS, THE PARTY''''S OVER..................

[yellow651]

I can think of few things I hate more than buying a car from a dealer''s lot. My last three purchases were over the internet where I didn''t have to deal with the lies and pressure -- I once had a Lexus dealer hide the car keys for my trade to keep me from walking out. I have no desire to see my tax money go to car companies. Let them file for Chapter 11, restructure their union contracts, change their dealer organizations and focus on internet sales rather than huge expensive car lots.

[inketolstoy]

Our cashless society seems to be crashing. Maybe it is time to go back to the old way. No job, no money, you don''t need this either.

[ici2i]

once had a Lexus dealer hide the car keys for my trade to keep me from walking out. I have no desire to see my tax money go to car companies....

Posted by yellow651

A Lexus dealer eh? You and others missed the point and probably always will. No doubt there are many things that should and could have been done differently to insulate themselves from these tough economic times. However, I bet it isn''t hurting your snobbish pocket book if you can afford one of the most expensive cars on the market. One of the main points of the article is about the trickle down affect of failing dealers. One of the dealerships in my town is the primary benefactor of a summer camp for kids with cancer. By your way of thinking, tough luck and who cares right? You may be right about necessary changes but you''re still a selfish arrogant snob none the less for failing to appreciate the gravity of the changes.

[bobnjersey]

[Doesn''''t Father Washington, who the Indians have been calling the Great White Father for years know best? Let''''s see, Amtrack, the post office, Social Security, and Medicare come quickly to mind. Hmm, methinks that may not be such a hot idea after all.]
[Posted by dovestar at 10:06 AM : Dec 03, 2008]

is the ''so called'' free market fairing that much better ... with whole sectors of the economy failing miserably?

[bobnjersey]

[I can think of few things I hate more than buying a car from a dealer''''s lot. My last three purchases were over the internet where I didn''''t have to deal with the lies and pressure.]
[Posted by yellow651 at 11:37 AM : Dec 03, 2008]

my last car purchase was from a family owned pontiac dealership that also happens to be the oldest pontiac dealership in the country ... dating back to roughly the 1930''s. the grandfather of the current owner/operators is still alive at over 93 ... and he sold more than one car to my father ... over fourty years ago. mr. rassas (the patriarch) was in the showroom the day i purchased the car.

i have no doubt i did not necessarily get the best price. my intent was for all parties to win in the deal ... i get a car w/ reasonable level of reliability and reasonable cost ... the ''family owned'' dealership makes a profit on the sale ... an american worker has something to make (manufacture) ... and an american company hopefully makes a profit. any tussle between parties i see as a challenge of wits ... and part of the game of buying a high ticket item.

[Let them file for Chapter 11, restructure their union contracts, change their dealer organizations and focus on internet sales rather than huge expensive car lots.]

can you send your car in for service thru your broadband connection too?

[tmittelstaed]

"... A nation''''s real wealth can only be created by producing and adding value to material, not by sitting in the middle and skim off the top..."

Dealerships do that, however. The automakers don''t want to spend money talking to end-users. It''s not like Dell Computers, where a computer being sold through a big-box retailer got zero value-add, with minimum wage salespeople selling them who couldn''t even spell the word computer - Dell Direct made a lot of sense, there.

With a properly run dealership, if you buy a car from them and you have ANY questions at all about it, you can pick up the phone and call them.

[arnoldbowers]

i can recall to the near past when they were closing the Airforce Base here in Austin, the city council and other authorities cried the sky was falling and Austin, Tx would dry up and fly away, well let me tell you it did not as a matter of fact gw bush and perry has mad billions out of that closuer and the city is charging down the road, so will the cities with the car dealerships closing they will survive and in a few years it will be forgotten, ever city has those thinking the sky will fall if this or that industry closes (here it is a high price car dealersiip who have made billions off the poor public for years), they are wrone as always, let the business move on and the people will find work elsewere. Frank

[arnoldbowers]

The only problem with social security for those over the age of 65 is the only good thing mentioned above, the only problem here is our congress has just about robbed it for such things as the big dig in Boston, the new tourist thing in DC and ever thing else they could if all the money was given back to the social security they since Truman and his folks to gw and his crew has stolen for their friends we would not have any shortage this is the fact just look at the 100''s of trillions taken by one congress or another one president or another, the sick and the poor who paid nothing but now draw medicade from the social secutity which was not part of the original package nor was the orphan payment about the age of 16 in the original package now we have them drawing it for a broke finger, a headache, a broke rib you name it and you have the lazy getting social security under the medicade package. Frank

[VegasResident]

The problem still all goes back to housing. Bad loans were made, housing crashed. This led to people being stuck with houses worth little or losing them. This reduced cash to spend, this hurt businesses, busiensses laid off, these people lost their houses....less people were able to spend...this hurt businesses, etc.

For example, I need a new car. But, I had to move and so I own a second house I currently cant sell because it is worth less than I paid for it. I have a 30 fixed, 20% down and can afford the monthly costs, etc. But as a result, I cannot buy a car...If the house would sell I would buy the car. But Vegas has a billion foreclosures and they are selling for less than it even costs to build the same house...so I wait

Want to fix the economy? Keep people in their houses, stop the foreclosure and fire sales by banks and then other areas will recover.

[VegasResident]

" Lexus dealer eh? You and others missed the point and probably always will. No doubt there are many things that should and could have been done differently to insulate themselves from these tough economic times. However, I bet it isn''''t hurting your snobbish pocket book if you can afford one of the most expensive cars on the market. One of the main points of the article is about the trickle down affect of failing dealers. One of the dealerships in my town is the primary benefactor of a summer camp for kids with cancer. By your way of thinking, tough luck and who cares right? You may be right about necessary changes but you''''re still a selfish arrogant snob none the less for failing to appreciate the gravity of the changes.

Posted by iCi2i at 02:01 PM : Dec 03, 2008
+ report abuse

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Gee whiz why not string him alive for trying to buy a Lexus????

The bottom IS is $31,000 a fair shake less than many American trucks such as a Avalanche which starts at $35,000 So just because he went there does not entitle you to rip him a new hole....