Friday, May 8, 2009

The city's cash cows (auto dealerships) are fading, and it's only going to get worse

A few years ago, cities were jumping head over heels to land themselves one of them there auto centers. You see, them there auto centers sell autos, and autos cost a lot more than the stuff you buy at them there dollar stores - which means more tax revenue for the city. So if you set up one of these high-falutin' auto malls in your city, and you get a bunch of dealers to move in, then your city is in the gravy! Ain't that great?

Well, it is if people are buying autos.

This is technically a local story, since it's occurring in Norco, California (a city just north of Corona, if that helps you pinpoint it), but I'm sure that this same issue is playing out in cities all across the United States.

Norco Mazda has closed, just five months after the city of Norco extended a $500,000 loan to keep the dealership afloat.

A sign on the door states the dealership has closed "temporarily," but one city official said the owner gave no indication when it might reopen....

Norco in December loaned $1 million in redevelopment funds to two dealerships to help them stay open. The other was Frahm Dodge, which also sells Jeep and Chrysler vehicles.

So far both dealers have made the scheduled payments, but with Norco Mazda closed indefinitely and Chrysler LLC entering bankruptcy, the future of both Norco dealers is uncertain.

Oh, yes, the problems of the national auto chains. Chrysler and General Motors are strongly being encouraged to close dealerships, which will ripple throughout the country and hurt cities even further.

Well, it will hurt those cities that counted on auto dealerships as their sole cash cow.

Cities that are capable of diversifying their local industries, so that they're not solely dependent upon auto dealerships, will obviously not be hurt as much as those cities that chose to put all their eggs in the auto dealer basket.
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