Editor’s Note: GM also announced they will be reducing their dealership footprint as well. The commercial real estate market is under pressure and this will push real estate prices lower over time.
News (Wall St. Journal):
The announced closings of more than 700 Chrysler dealerships nationwide is poised to add to the rising vacancy rates in the embattled commercial real estate industry.
The ensuing fallout, however, is likely to shake out differently compared to the broader retail market, given complicated land configurations, rich property values and geographic issues unique to car dealerships.
“We’re in the middle of a recession in which the attention to real estate difficulties is starting to turn to commercial real estate,” said Paul Taylor, chief economist for the National Automobile Dealers Association. “The timing is absolutely difficult for these dealers to try and sell the property if they closed the dealership.”
Chrysler LLC said it is looking to drop 789 dealers from its retail network of nearly 3,200 to streamline business and move the bankrupt auto maker to profitability. Chrysler noted in the court filing that it has significantly more dealers than rivals Toyota Motor Corp. (TM) and Honda Motor Co. (HMC), but sold fewer cars. General Motors Corp. (GM) is also expected to tell some dealers Friday that they face closure.
You must log in to post a comment.