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Car Dealers Write Off Domestic Franchises

Groups writeoff value of franchises as economy shifts into low gear

By Jim O'Neill,  Newser User

Posted Oct 29, 2008 6:36 AM CDT
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(Newser) – Two of the largest chains of car dealers report that their domestic auto franchises have become virtually worthless, the Wall Street Journal writes. The companies took a  a combined $51 million in writedowns for the third quarter, reflecting disappearing "franchise value"—the measure of potential profit—for dealerships that sell brands from GM, Ford, and Chrysler.


Sonic Automotive and Group 1 Automotive—the third- and fourth-largest chain of dealerships in the nation—said sales of domestic brands continue to lose ground to foreign competitors, providing just 17% and 18% of revenues, respectively, in the third quarter. Other dealership chains are expected to announce writedowns in coming weeks.

Chrysler vehicles on display at a Chrysler dealership in Redwood City, Calif.
Chrysler vehicles on display at a Chrysler dealership in Redwood City, Calif.   (AP Photo/Paul Sakuma)
Hummers are lined up at a dealership in Columbus, Ohio.
Hummers are lined up at a dealership in Columbus, Ohio.   (AP Photo/Kiichiro Sato)
A long line of unsold 2007 Mazda CX-7 sports utility vehicles sits on the lot of a Mazda dealer in the southeast Denver suburb of Centennial, Colo.
A long line of unsold 2007 Mazda CX-7 sports utility vehicles sits on the lot of a Mazda dealer in the southeast Denver suburb of Centennial, Colo.   (AP Photo/David Zalubowski)
Chrysler and Dodge vehicles are lined up at a Chrysler dealership in Portland, Ore.
Chrysler and Dodge vehicles are lined up at a Chrysler dealership in Portland, Ore.   (AP Photo/Rick Bowmer, file)
Customers talks to a Ford salesman at a Ford dealership in San Leandro, Calif.
Customers talks to a Ford salesman at a Ford dealership in San Leandro, Calif.   (AP Photo/Paul Sakuma)
An unidentified shopper looks over unsold 2008 Yukons on the lot of a GMC Truck dealership in the small northwest Colorado community of Meeker.
An unidentified shopper looks over unsold 2008 Yukons on the lot of a GMC Truck dealership in the small northwest Colorado community of Meeker.   (AP Photo/David Zalubowski)
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COMMENTS
Showing 1 of 1 comment
Guest
Jan 22, 2009 12:39 AM CST
now we're talking about loosing and gaining. ..

Dealerships close as market collapses
Wall Street Journal Subscription

Dealerships see no end to woes
San Diego Union-Tribune

 
Chrysler • General Motors • automaker • Ford • financial crisis

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