The Chicago Tribune has an long,interesting, article on car dealerships :
Last year, 760 of the nation's 20,770 dealers disappeared, and the National Association of Auto Dealers expects at least 1,200 to close in 2009. Five years ago, according to a local dealers' group, the city of Chicago had 53 dealerships. Today, it has just 37 and falling—a 30 percent decline.
and this profit warning:
Paul Taylor, NADA's chief economist, said that by the end of 2008, average industry margins had shrunk to just 1 percent of sales, the lowest level in two decades. But even that's deceiving. Auto dealers haven't made money selling new cars for three years, Taylor said. Any profits are coming from the service department and selling used cars.
What's the value of the land?:
In easier days, one exit strategy for inner-city dealers would be to sell the underlying land to a real estate developer for condos. But with lending at a standstill, land values have plummeted, said Hallmark and Johnson's David Kontny, who has been brokering dealer lots for three decades. Two years ago, a big lot on the auto strip along Western Avenue where Z Frank did business would command as much as $120 a square foot, he said.
"Now you're lucky to get $50," he said. 'The values have dropped precipitously."
You'll want to read the whole article.
