City brace for shutdown of auto dealerships - what to do with empty car lots?

[Liberal_in_LA]

http://www.latimes.com/business/la-fi-dealers14-2009may14,0,1882072.story



A wave of closures by GM and Chrysler is likely to leave many car lots sitting empty. Dozens of cities also depend on sales tax revenue from the dealerships to balance their budgets.
By Roger Vincent
10:26 PM PDT, May 13, 2009

With struggling automakers expected to announce the shutdown of thousands of dealerships starting today, cities are bracing for a wave of blight.

The closings will dump thousands of large, oddly configured parcels into an already reeling commercial real estate market. Many are likely to remain empty for a long time, monuments to the decline of the U.S. auto industry and the intensity of this recession.

Chrysler is expected to tell a Bankruptcy Court today that it will break its contracts with as many as 800 dealerships nationwide.

General Motors Corp. will tell 1,000 to 1,200 dealers Friday that it will not renew their franchises. The automaker plans to eventually close a total of 2,600 operations.

In California, the moves will have far-reaching implications for dozens of cities, which depend on sales tax revenue from the dealerships to fund substantial portions of their budgets.

The dealerships join a growing list of retailers felled by the dour economy: Sites that once held Mervyn's, Circuit City and Linens 'n Things stores remain empty except for a few locations. And as difficult as it has been to sell or lease those properties, at least they can be easily adapted for other uses. Car dealerships, on the other hand, are special-purpose properties that are hard to adapt.

"There are not a lot of uses that can go right back into a dealership," said Jodi Meade, director of the automotive properties group at real estate brokerage CB Richard Ellis. "Usually they have to scrape it" and start over to make way for another business.

[SoCalDem]

1. Same thing that happens to all the empty "big-box" buildings..

They'll sit there, and weeds will grow in the cracks in the asphalt..

and the cities will pay to have them patrolled by overburdened police..:(

We've had an ENORMOUS Home Base store and the ENTIRE shopping center it anchored (including a movie theatre) sitting empty for TEN YEARS...

[Liberal_in_LA]

3. We've had a Montgomery Wards (remember them!) sitting empty for 10 years.

Weeds growing in the parking lots. This is in the SFV part of LA. You might know of it, being from South California.

[MADem]

2. Put some FEMA trailers up on them, and give them to homeless families as

short-term housing.

[HereSince1628]

4. Here two were demolished, one sprouted into a discount grocery another

sits looking forelorn at the yards of 3 warehouses that are slated to be razed and replaced with condos...but the starting date has been pushed back twice...who is buying condos in a recession?

[JVS]

5. Why are these dealership contracts being broken? I'm not familiar with the workings of the system..

so I'm wondering what it costs the car companies to keep the dealers purchasing their product to retail. What's the setup that makes dealership contracts a liability to the big 3?

[eilen]

6. good question

it also begs the question of how they will increase sales without a sales outlet.

[islandmkl]

12. they have to over-produce (compared to sales) to have cars on all those lots...

cars were 'alloted' to dealers based on unit-volume sales, but even low-volume dealers had to have some cars...multiply those low-volume sales units by hundreds (or thousands) and you have product manufactured that essentially is going nowhere in terms of "make 100%, sell 100%"....

[JVS]

13. But what's it to them as long as they get their invoice?

What is the chain of possession of these cars?

[islandmkl]

14. the cars are on a form of 'consignment', not purchase....

dealers have 'floor plan' financing versus having purchased the cars from the manufacturer...it's like paying the vig on a street loan, hoping to sell the car before the loan comes due...that is why dealers would make hot deals on some cars on their lots...it 'vig' period was running out, and they were about to get upside-down on the car, therefore they would 'deal'...with the economic 'slowdown', NO cars are moving, and the manufacturer cannot get money from dealers selling no cars...the amount of cars offered has no bearing...

[Berry Cool]

7. We're ahead of the wave in Ohio.

There's a dealership up the street from me that closed its doors months ago. Just shut up shop and closed down, just like that, after years in that location. Just loaded all the cars in the lots and showrooms onto trailers and was gone...poof.

[ThomWV]

8. They open them on saturdays as Flea Markets and ex-employees sell their souls there

for pennys ....

[TheCowsCameHome]

9. Plant trees, like the ones they cut down to build the lots.

[proud2BlibKansan]

10. Tent cities for the homeless?

[madrchsod]

11. fire up the caterpillars.....

turn the car lots into neighborhood parks or community gardens. the dealerships that will be closed won`t be in the suburbs. it will be inner city and rural dealerships.

[Liberal_in_LA]

17. I like that idea.

[PassingFair]

15. Auto repair and used cars....

It's happening in the Detroit suburbs already.

We'll be just like CUBA!!!

[JVS]

16. but without the healthcare