Dealership Closings Have Ripple Effect

Closing Dealerships Impact Other Businesses, Tax Revenue, Community Sponsorships

(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.

[walt1944]

Its a fact of business life that upper management makes the decisions that "steer" the company through obstacle course called "business". The average workers have absolutely nothing to do with making the decisions about where the company is going, what it should be making, etc.

When upper management makes a sound decision, they are treated as :geniuses", get big bonuses, lots of perks, and a huge salary.

90% of the time, though, upper management doesn't care at all about making the right decisions, trying to save the company, or what impact their decisions have on all other workers. All these airheads are interested in is that "THEY GET THIERS" and to H-E-L-L with everyone else!

And when things go sour, thanks to what stupid decisions they have made, THEY DON'T MAKE THE SACRIFICE!!! Instead, the average worker pays the price by getting his hours cut or losing his job!!!

That's business!!!

HAIL OBAMA???

[whitemale08]

Some of these small towns accross America were gutted by BIG AGRI like ADM, and textile and manufacturing gutted by British 'globalization' during the 70s and 80s.

During the 90's these towns could only rely on car dealerships and strip-malls.

Now that strip-malls are closing down and the shut-down of car sales, the only thing left is making sandwiches @Subway and dropping wings @Popeyes Chicken.

And Obama has a bunch of these 'behaviourists economists' advising him who can't see this happening and connect the dots that the bail-out money to Goldman Sucks and JP Morgan is a crime to the taxpayer when that precious money could be used to bring back manufacturing and local agriculture.

I once had high-hopes for President Obama but now it's hard for me to call him 'president' since he's not acting very presidential right now.

He's turned to the Dark Side and made himself a puppet of BIG FAILED BANKS.

[mypatch]

First of all the car makers brought this catastrophe on themselves. Building inferior autos and selling them for an enormous price. Out of reach to many people. Only rich and middle class can afford an auto. Now the middle class will be gone. It has slowly dissolved since the 80's.
There's an up side to this. If the poor can't buy a car then the prices will drop to an affordable one. Supply and demand drive sales. Stop your complaining and accept what life has slammed you with and go on as best you can. What a bunch of cry babies.

[hungry1968-15]

Could you please help me find these things Sir?
1. Occidental College records -- Not released
2. Columbia College records -- Not released
3. Columbia Thesis paper -- "Not available"
4. Harvard College records -- Not released
5. Selective Service Registration -- Not released
6. Medical records -- Not released
7. Illinois State Senate schedule -- Not available
8. Your Illinois State Senate records -- Not available
9. Law practice client list -- Not released
10. Certified Copy of original Birth certificate -- Not released
11. Embossed, signed paper Certification of Live Birth -- Not released
12. Record of your baptism -- Not available
Oh and one more thing Mr. President, I can't seem to find any articles you published as editor of the Harvard Law Review, or as a Professor at the University of Chicago. Can you explain that to me Sir?

We thank you.
Posted by vistavermin1 at 6:49 AM : May 16, 2009





What makes you think that you're entitled to ANY of these things?

Are you even an American?

[specialty8]

Mr. Obama, how is this saving jobs, or creating jobs? Do you have enough goverment jobs for everybody? You seem to have forgot, or never knew, when you keep on loading the wagon, somebody has to pull it.

[specialty8]

Now how does trickle up work? The only ones getting the ax are the small family owned ones, where you get good service and are not a number. I guess thats just part of the plan, everyone has a number.

[hungry1968-15]

What?
Closing dealerships will have an effect that will trickle down through the community?

But the Dembots told us trickle down was an evil Republican lie?

And now they're talking about how trickle down is real?

What gives?
Posted by hawksprings at 11:10 PM : May 15, 2009





If you're trying to prove how incompetent you are, or how you fail to grasp even the simplest concepts of reality, or how you fail to understand any and all issues that we debate, don't bother.

You've already proven yourself, dozens of times over.

[rhs648]

Tammy Darvish is obviously a millionaire if she owns 18 dealerships, and she could afford to refranchise those dealerships as Toyota or Honda dealerships if she wanted to. So why doesn't she? I'll tell you, it's because the economy is down and she knows better than you do that the number of people buying cars isn't going to increase just because she refranchises.
The automakers are doing her a favor, they are making her more money. The other dealerships she has will simply sell the cars that her closed dealerships would have sold, and she will sell more cars with fewer people, so she makes more money. And she now has a convenient scapegoat to blame so the community doesn't figure out she is pulling the wool over their eyes and stop buying from her.
For all the protestations these dealership owners make, you watch and I would bet less than 1% file a lawsuit and try to fight to get their franchises back. They aren't going to put their money where their mouths are.
Posted by tmittelstaed

It is difficult to imagine that aperson would imvest millions of dollars in the land, buildings, and equiptment required by dealers unless they planned to make money. It is also difficult to believe that the franchise provisions don't have all kinds of requirements built into the contracts between GM and Chrysler and the dealership owners. When contracts become meaningless, none of us can depend on their value. Now we see how the government abandons contractual law when it feels like it. The auto manufacturers would love to have thrown out agreements with the UAW but could not in the past. Trust is eroded when contracts are nullified by our government.

[tivis3]

I am a federal inspector and have the opportunity to meet many "foreigners" who either have businesses in America or are traders. Each and everyone of them firmly believe that General Motors makes the best product in the world (as witnessed by their sales overseas). Ask them who they would buy their next vehicle from and the answer is always "GM".

Come on you "americans" out there. Get behind GM & Chrysler, buy their great products, and help restore our industrial might unless you want these companies to go the way of the steel, textile and other industries.

Chip-Sarasota(by the way, I own a Dodge)

[tmittelstaed]

Tammy Darvish is obviously a millionaire if she owns 18 dealerships, and she could afford to refranchise those dealerships as Toyota or Honda dealerships if she wanted to. So why doesn't she? I'll tell you, it's because the economy is down and she knows better than you do that the number of people buying cars isn't going to increase just because she refranchises.
The automakers are doing her a favor, they are making her more money. The other dealerships she has will simply sell the cars that her closed dealerships would have sold, and she will sell more cars with fewer people, so she makes more money. And she now has a convenient scapegoat to blame so the community doesn't figure out she is pulling the wool over their eyes and stop buying from her.
For all the protestations these dealership owners make, you watch and I would bet less than 1% file a lawsuit and try to fight to get their franchises back. They aren't going to put their money where their mouths are.