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Auto row safe, for now

Posted: May 16, 2009 3:56 p.m.
Updated: May 17, 2009 4:55 a.m.
 

None of Santa Clarita’s auto dealers are on the chopping block, but city officials are gearing up for possible changes down the road.

On Thursday Chrysler, which declared bankruptcy April 30, announced it is shutting down nearly 800 U.S. dealerships. And General Motors, which is widely expected to declare bankruptcy June 1, said Friday it will shutter about 1,100 dealers by late next year because of weak sales.

Neither Power Chrysler or any of the GM dealerships on Valencia’s auto row are slated for closure, according to Don Fleming, president of the Santa Clarita Valley Automobile Dealers Association. GM has not publicly released a list of dealerships slated for the ax.

“I think we’re in pretty good shape here locally,” Fleming said Friday.

That said, he noted that all the dealers have felt the crunch of the faltering economy and have instituted freezes on pay raises, bonuses and overtime.

None of the GM dealerships under the Parkway Supercenter umbrella received closure notices, said a senior manager who spoke with The Signal on the condition of anonymity.

Parkway Supercenter includes Valencia’s Pontiac, Buick, GMC, Cadillac, Hyundai, Infiniti and Volkswagen dealers.

“I think (what GM is doing) is a mistake,” the manager said. “The problem is not that we can’t sell cars. The problem is we can’t get anybody financed.”

The manager said the nationwide credit crunch continues as a major source of negative pressure on auto dealers.

Pontiac is one of three GM brands slated for extinction.

By October 2010 Pontiac is expected to cease production, and the brakes also will be slammed on for the Hummer and Saturn brands this year unless the two are bought out.

The Penske Automotive Group is reportedly eyeing a bid on Saturn, and the Parkway manager said a letter from Hummer this week stated: “negotiations are going well for a sale.”

“I don’t think the brands are going to go away,” the manager said. “I think we’ll be fine.”

For the time being, Creekside Road’s Dodge dealer also is apparently safe.

Ephraim Barcelo, general manager of Power Chrysler, Jeep and Dodge said Friday: “We’re open for business and we’re happy to be here.”

Fleming said the loss of any local dealerships would be a dark cloud.

“It’s just not good for our psyche,” he said.

That sentiment was echoed by city spokeswoman Gail Ortiz, who said dealership closures “would be awful.”

Valencia’s auto dealers have traditionally been the city’s single largest source of sales-tax revenue — which, in turn, is the largest source of cash for Santa Clarita’s general fund.

“They are definitely important to us, and we definitely don’t want to lose any of them,” she said.

However, she said city officials are expecting some changes on auto row. That could mean vacancies. She said the city’s economic-development department is actively trying to court potential new dealers to the valley.

There are a few apparent bright spots in the midst of the turmoil.

Fleming said business remains strong in parts-and-service divisions, as well as used-car sales.

The Parkway manager agreed, and said while the Supercenter has seen a roughly 50-percent drop in new-car sales from 2008, pre-owned sales are up about 40 to 50 percent.

 

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