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
Chrysler vehicles on display at a Chrysler dealership in Redwood City, Calif.   (AP Photo/Paul Sakuma)
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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.