Destroying dealership jobs?

CBS:

Tammy Darvish owns 18 car dealerships, most of them in Maryland. Two were dropped Thursday and she's waiting for word on a third. Three hundred people stand to lose their jobs, and 233 local vendors stand to lose business, reports CBS News correspondent Nancy Cordes.

"It could be a cleaning company, it could be towing companies, companies that we buy our tires from," Darvish said.

There are few firms more intertwined with their communities than car dealerships.

"Every high school in the area, every middle school in the area, all the parks and recs - you name it, we've tried to attach our name to it," said Jim Stutzman, a dealer in Winchester, Va.

Friday, even as he braced for the fate of his Chevy franchise, Stutzman teed up at a Winchester charity golf tournament.

"In good times I'm talking upwards of six figures a year that I drive back into this community," Stutzman said.

That's before you factor in the taxes dealers pay - crucial to small cities like Bonham, Texas, which lost $1.1 million in sales and real estate tax revenue when a Ford/GM dealer closed in November - nearly 8 percent of the mayor's entire yearly budget.

"Our economy is suffering not only from the tax hit but from the direct employment of 45 careers and families that are now going have to move away," said Bonham Mayor Roy Floyd.

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I would like to get a better understanding of how keeping the dealerships cost GM and Chrysler money. Do their contracts require the manufacturers to subsidize them or is it just the cost of training the mechanics to work on the new products they will have to service? Some very large dealerships have already closed because they operated on a high volume low price model that also required floor plan financing at attractive rates. When the volume dropped the cost of maintaining a large inventory was no longer sustainable.

This is just another indication of the need of both manufacturers and dealers for high volume on some expensive products.