California Towns Bail Out Auto Dealerships

The Wall Street Journal reports:

Detroit's troubles are forcing some communities to attempt an auto bailout of their own: propping up their local car dealerships.

Two California towns, hoping to preserve jobs and tax revenue, are bailing out local car dealers that are struggling to stay afloat amid tight credit markets and plunging demand for new vehicles.

Victorville, a desert town on the main highway between Las Vegas and Los Angeles, recently approved a $200,000 loan to Victorville Motors, a 40-year-old family-owned dealer in the town's auto park. Norco, east of Los Angeles in the so-called Inland Empire, has approved loans of $500,000 each to Norco Mazda and Frahm Dodge. A third city, Redlands, is mulling over a financial-assistance proposal for its new- and used-car dealers.

Municipalities love car dealerships because they produce tax revenue: car dealers know this.