How about $20B for car dealerships?

Discussion in 'Economics' started by TGregg, Oct 1, 2008.

  1. TGregg


    DETROIT (Reuters) - As many as 3,800 U.S. car dealerships could fail this fall and into 2009 -- nearly one in five -- because of weak sales, increased operational costs and the credit crunch, according to a forecast released on Wednesday.
  2. clacy


    Hell, why not? What about a bailout for plastic surgeons?

    Surely their business will be down since it's elective.

    Probably the largest single obstacle to the average US citizen accumulating wealth is overspending on vehicles. They are a deprecaiting asset that many American households spend hundreds if not thousands, each month on.
  3. Great article.

    This is surreal (what's happening).

    20% of car dealerships - poof! Gone like vapor.

    It's consistent with a friend of mine whose family owns 5 dealerships. I went to high school with him. He told me car sales have not been this weak in his lifetime, and even his father doesn't recall a time as bad.

    They've swapped two of their dealerships from Lincoln/Mercury to Kia/Hyundai and a Mazda, and those are doing better, although not great.
  4. Car dealerships are so last-century. It's long past time the middlemen and inventory-stacking problems were dealt with. I could easily see more than half the dealerships getting wiped out - and it would be good for consumers.
  5. There are far too many car dealerships around to begin with.
  6. BSAM


    I like frosties. If anyone from the government is listening, please do a bailout for Wendy's. Thanks.:p
  7. TGregg


    Heh, yeah guess there's two industries that just ain't getting a bailout - fast food and tobacco.
  8. bit


    You forgot booze! They're just getting bought out! :p
  9. I've often wondered when it would happen that you go to a 'kiosk' after test driving and agreeing on a specific car, order it direct from the manufacturer, and either have it delivered or pick it up at the same 'kiosk.'

    No dealer, middlemen or commissions.
  10. Wow. Ford sales plunged. Even Honda got dinged badly.

    Used cars - no exception.

    CarMax Laying Off 600 Service Workers

    Published: October 1, 2008

    Filed at 3:13 p.m. ET

    RICHMOND, Va. (AP) --
    CarMax Inc. said Wednesday it is laying off 600 employees, or about 4 percent of its total work force, as the auto retailer tries to cut costs due to a decline in car and truck sales.

    The Richmond, Va.-based company said the reductions are in its service operations departments at a majority of its production superstores, where it reconditions vehicles. The production superstores make up 60 of the company's 99 retail locations.

    ''Since Memorial Day, we have taken significant steps forward in aligning our costs with current sales levels,'' said Chief Executive Tom Folliard said in a news release. ''Since that time, we have achieved our store staffing objectives in most departments, but it was necessary to make further reductions in service operations in order to reach these staffing goals.''

    ''This was a difficult but necessary decision for us to make.''

    Employees were notified on Wednesday and were offered severance packages, said CarMax spokeswoman Trina Lee. The company, which has about 15,250 employees, said it expects about $7 million in severance costs will be included its results for the third quarter ending Nov. 30.

    Its shares fell 80 cents, or 5.7 percent, to $13.20 in afternoon trading Wednesday.

    Last week, CarMax said its second-quarter earnings plunged 78 percent due to a weak economy, high gasoline prices and losses in its financing arm. The company said earnings for the quarter ended Aug. 31 fell to $14 million from $65 million in the same quarter last year.

    Total sales fell 13 percent to $1.84 billion from $2.12 billion a year ago. CarMax said same-store sales, or sales at stores open at least a year, tumbled 17 percent during the quarter.


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    #10     Oct 1, 2008