Tuesday, May 26, 2009

Closing Dealerships will Affect Newspapers, TV Stations, and Radio Stations

Recently, we've heard that the number three automaker in the U.S., Chrysler, and what may be, or may no longer be, the largest automaker in the world, GM, will force the closure of hefty percentages of their dealership networks.

It's all been pretty amazing, really. Less than a year ago, those who issue news regarding the health of the auto industry seemed to believe that Ford was likely to declare bankruptcy while Chrysler and GM might limp along. Things haven't turned out that way at all. In fact, Ford, the only maker that didn't take federal bailout money, seems to be far healthier than anyone might have guessed.

What will be the fallout of so many dealerships being closed? Well, if you follow the news, you're probably aware that some dealership owners will A) go out of business (probably being allowed to resell their inventory to another dealer with little or no profit), B) some will convert their facilities to the sale of used cars, and C) some will switch to selling other makes.

However, something that doesn't seem to get discussed much is this: newspapers, tv stations, and radio stations, all of which depend heavily on ad revenue from auto dealers, will be dealt a pretty heavy blow. I don't know much about the health of the local tv and radio industries, but it would be hard to be unaware of the fact that newspapers are on the ropes and many are going under.

The closure of literally thousands of Chrysler and GM dealerships will accelerate the disintegration of U.S. newspapers. And I wouldn't be surprised if some of them begin to fail almost immmediately after GM and Chrysler get the reductions in active dealerships that they are looking for. Which goes toward illustrating what many said all along. If the American car industry takes a hit, a lot of other industries also take hits, including many we may not have thought of. In fact, I just thought of another: Ebay (lots of dealers have listings on Ebay, and some for not too much longer).

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