Discontinued dealerships may find a disappointing gap between what they think land is worth and what buyers are willing to pay

(Source: Globe and Mail)

As of last Jan. 1, there were 709 GM dealerships across the country, 446 Chrysler new-car dealers, 437 for Ford, 239 for Toyota, 226 for Honda, 171 for Hyundai and 164 for Mazda.) Dennis DesRosier of DesRosier Automotive Consultants Inc. says his understanding is that 399 new-car dealerships of all brands will close during the next five years: 190 this year, 120 in 2010, 50 in 2011, 25 in 2012 and 14 in 2013.

At stake are chunks of what in many cases is prime real estate, says Terry Alexander, vice-president at Colliers International in Toronto.

“We are working with several dealerships in the Greater Toronto Area right now,” he says. “While all the land involved may seem like a lot, in terms of real estate coming on the market, it is not really significant.”

“Some may find other car makers to represent; some may become used-car lots. Others, however, may sell or sublease their property. In fact, with dealerships running from two to six acres and usually in prime, high traffic areas, the value of the land may be worth more than the dealership is as an ongoing business.”

However, many discontinued dealers may find there is a disappointing gap between what they think their land is worth and what buyers are willing to pay.

Read Terrence Belford’s full article “Dropped new-car dealers face agonizing choices” in the Globe and Mail (August 4, 2009).

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