Undernews is the online report of the Progressive Review, edited by Sam Smith, who has covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

May 26, 2009


Stateline - Just when many state governments are weeks away from the start of another budget year, a new crisis has emerged that threatens their finances: the closing of nearly 2,000 automobile dealerships.

Coupled with the slowdown in automobile manufacturing and sales, the dealership shutdowns recently announced by General Motors Corp. and Chrysler will have a deep impact on state and local governments already enduring what may be the worst recession since the Great Depression. Consider that a fifth of California's sales tax revenue is from new and used car sales.

"As these local dealerships close, the impact will be more profound than people realize," said Sen. Mark Norris, the Republican Senate majority leader in Tennessee. Chrysler is planning to close 14 dealerships in his state.

To improve profits, Chrysler, which has filed for bankruptcy protection, said it will close 789 dealerships throughout the country by June 9. GM has not released the list of 1,200 dealers it plans to shutter. Until now, Michigan and other upper Midwest manufacturing states have borne the brunt of the auto industry tumult, but the demise of the dealerships widens the scope of the problem. It's expected to put about 100,000 people out of work nationwide. .

Dealers often are keystones of their communities, "with some of the better jobs available," said Paul Taylor, chief economist of the National Automobile Dealers Association in Virginia. A single dealership employs up to 100 people and averages $16.5 million a year in state and local taxes, advertising expenditures and charitable contributions. Dealers collect taxes on auto sales, parts and repairs. Their employees pay state income taxes in most states. Car-buyers pay titling fees and in some states, a personal property tax.

New Hampshire lawmakers were first to attempt to help car dealers. The bill, signed May 6 by Gov. John Lynch (D), allows local dealers to continue servicing vehicles even if they no longer sell cars. If a dealer closes, the bill requires the automaker he or she represents to buy back inventory delivered in the last two years, which helps the dealer stay on his feet to re-open as a used car lot or repair shop. . .

According to the Alliance for American Manufacturing, the auto industry supports 7.2 million jobs in a wide network of suppliers and service workers, In 19 states, auto supply manufacturers are among the top five industrial employers. Those workers eat in restaurants, buy clothes for their kids and get their teeth cleaned, activities that create other jobs. The ripple effect is more like a wave: U.S. Rep. Tim Ryan, a Democrat from Ohio, said the loss of two shifts at a GM plant in Lordstown since last summer caused the unemployment rate in Trumbull County to double from 7 percent to 14 percent. . .


Blogger Igor said...

Want to loose car dealership or other job. Donate money to RNC or any opponent of Obama.

Next he start shipping people to Siberia or North Alaska work camp!

I Igor produce Barrack Milhaus Hussein Obama Birth Certificate at www.igormaro.org

May 27, 2009 12:37 PM  

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