Auto dealerships close with credit crunch

October 1, 2008 7:25:53 PM PDT
The financial crisis has spread from Wall Street, to Main Street, and auto row, along the way. Ford reported its sales were off by almost 35 percent last month, Toyota was down 32 percent, Honda was down 24 percent, and for G.M. was down 16 percent. It's so bad, three Bay Area dealerships have closed their doors in the past two days.

A dealership in Los Gatos shut down Tuesday and the folks over at Courtesy Chevrolet in San Jose said they are buying some of the inventory. They'll buy about 50 cars from the local dealer who couldn't send it back to G.M.

John Ceo spent 40 years in automotive sales and service. He couldn't resist stopping by the now closed Los Gatos Chevrolet dealer. Good Chevrolet in Alameda closed Tuesday, as did Colma GMC.

"This is the slowest death in the business world," said Ceo.

John echoes what analysts have said for years, that G.M. ignored the demand for cheaper, more reliable cars being offered by foreign manufactures.

"There's a lot of mixes and matches that they're trying to do now. Too little, too late," said Ceo.

The economy and credit crunch are proving to hasten the demise of dealers already struggling to survive. Courtesy Chevrolet in San Jose expects more consolidation and fewer dealerships in the future.

"Most people would say we don't need as many Chevrolet dealers to service and sell in this market we have right now," said Barry Rodenberg, general manager of Courtesy Chevrolet.

And this market is hurting everyone. At Toyota, passenger car sales fell 28 percent from September of last year and thanks to high gas prices, SUV sales dropped a staggering 38 percent.

Banks have a tight grip on money normally used to buy big ticket items.

"It's just very difficult and we're having to jump through hoops to get basic deals financed," said Geoff Yeager, a sales manager with Stevens Creek Toyota.

Virtually every auto manufacturer and their dealers are offering incentives and deep discounts. Maury Lambert used cash to buy a yellow Corvette in August.

"I got enough to buy the car and took advantage of it. Good timing on my part," said Lambert, a new car owner.

The big three U.S. automakers, GM, Ford and Chrysler are now counting on a just-approved $25 billion government loan to help them survive.

"It's much more serious than the closing a dealership here. General Motors really has to retool they have to throw everything out the window and get back to work," said Ceo.

G.M. has indicated it will use some of that government loan money, to help develop its much-anticipated, Chevy Volt, which is an extended electric vehicle due out in 2010.


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