Dealership Closings Have Ripple Effect

(CBS)  Tammy Darvish owns 18 car dealerships, most of them in Maryland. Two were dropped Thursday and she's waiting for word on a third. Three hundred people stand to lose their jobs, and 233 local vendors stand to lose business, reports CBS News correspondent Nancy Cordes.

"It could be a cleaning company, it could be towing companies, companies that we buy our tires from," Darvish said.

There are few firms more intertwined with their communities than car dealerships.

"Every high school in the area, every middle school in the area, all the parks and recs - you name it, we've tried to attach our name to it," said Jim Stutzman, a dealer in Winchester, Va.

Friday, even as he braced for the fate of his Chevy franchise, Stutzman teed up at a Winchester charity golf tournament.

"In good times I'm talking upwards of six figures a year that I drive back into this community," Stutzman said.

That's before you factor in the taxes dealers pay - crucial to small cities like Bonham, Texas, which lost $1.1 million in sales and real estate tax revenue when a Ford/GM dealer closed in November - nearly 8 percent of the mayor's entire yearly budget.

"Our economy is suffering not only from the tax hit but from the direct employment of 45 careers and families that are now going have to move away," said Bonham Mayor Roy Floyd.

GM said Friday the dealerships it cut loose were losing money and would have closed anyway.

"Is that true in your case?" Cordes asked Darvish.

"In our case no," Darvish said. "And same with yesterday. It's not like we're not viable, we're properly capitalized."

And that, Darvish said, is the true tragedy. Nobody wins. Not the automaker, not her workers and certainly not the neighborhood.

[cbsantispin]

I support GM and wish GM much success, but on the other hand GM does not need 6,200 Dealerships, we only have 50 States and 6,200 Dealerships is overkill. By comparison #1 Toyota has less than 1500 Dealerships and that includes its Lexus Division. Think about that for a minute, GM has 4,700 more Dealerships than Toyota!

[endurorob]

I was listening to a radio show while in the car today and it was a show on cars and the guy that was being interviewed(I can't remember his name) made a very interesting point. These dealerships are not owned by the car manufacturers. Theya are owned by the dealers. The dealers basically buy yhe cars from the manufacturer and seel them. The dealers own the building and everything else associated with the dealership. How does shutting them down help the manufacturer save money?

[co2user]

Ripple effects, are you kidding??? Everything this president does has more of a tidal wave effect. Particularly on "the Little Guy" that he has always tried to champion in his speeches and campaigns.
Wake up America!

[aka_KJB]

This was bound to happen eventually, no matter who was in the White House. You have an industry that has been selling fewer and fewer vehicles over the years with a dealership network that is nearly twice as large as sale could sustain. Between dealers themselves declaring bankruptcy and the economic downturn, it just makes sense. It stinks, no question, especially if you're one of the dealers that has to find something else to do with your 3 acres of asphalt. They can't all become used car dealers - there aren't that many used cars on the continent. And the used car industry isn't exactly setting the world on fire at the moment, either.

I do wonder what will happen to the physical spaces, though. You have a lot of these dealers who take up sizable chunks of land and just leaving them vacant is begging for them to become trashed out lots full of drugs sales, etc. Maybe they can put something into that big public works plan to convert some of the spaces into something more useful. Like zeppelin hangars.

Maybe it's time for the return of the drive-in? All you'd have to do is put up a screen and you're good to go. Plus, you'll have a lot more daytime fleamarkets for everyone having to sell their belongings to pay the light bill.

[gravyboat45]

my local rite aid shut its doors yesterday...
Posted by netjunkie1

I'm sorry to hear that. I was at my local Rite Aid a couple of days ago, the cashier said they were hearing ,"rumors". I love that store, where else can I get beer, a can of chile, a birthday card for the wife AND a clock radio with TWO settings?

Wal Mart? Oh, nevermind...

[gravyboat45]

I'm feeling the ripple effect. Yesterday I threw a chair at my grandma for stealing my pork rinds.
Posted by sky_five

Did ya hit her? If not, no worries, as long as you got the pork rinds back.

[hungry1968-15]

actually, you can thank obama directly for this one. He negotiated the deal that gave investors - the ones who were taking the risk - 29 cents on their dollar, squeezed the family-owned dealerships, and gave 55% ownership of GM to the UAW.
Posted by jgg00000008 at 11:54 AM : May 16, 2009





Where do you get this nonsense?!?!

[globalcoolin]

The United States's buisnesses are being embalmed by Obama, Under the promise of partnership with the government. Help and bail out.
Now, for many, it can be seen what he was talking about when he was a candidate! Some aren't going to see or understand it quit yet. A few more industries are going to have to be "helped" into oblivion.

[knyghtwolf]

shazmispanks, did your mom give birth to you greek style or perhaps you are one of those "hazardous waste" babies born in south america out of an inbred overworked, underfed pig farmer infected with Hepititis C? Did the other kids tease you in your mud hut school with names like Sir Farts-a-Lots, Stinky B, monkey boy, or perhaps pudsmack dingus choker? Perhaps the other MEN in your life had a CIRCLE JERK and you were the designated PIVOT BOY? Whatever, you are out of your league and definitely out of your element here, YOU are the instigator of third world propaganda and live in your own delusions of less than the granduer of an Amish sewer, go home blenderhead....

[debinok1]

""GM says it's network is too big, causing dealers to compete with each other and giving shoppers too much leverage to talk down prices and hurt the company's future sales.""

Even with bankruptcy looming in their future GM refuses to see that their vehicles are overpriced. Rather than bring those prices down to improve sales, they limit the options the consumer has to price shop.