Orange County’s auto dealers are hoping that the stalled $25 billion bailout of the domestic automakers,General Motors Corp., Ford Motor Co. and Chrysler LLC,will be revisited early this month.
“There’s just too much at risk” if it doesn’t get passed, said John Sackrison, executive director of the Costa Mesa-based Orange County Automobile Dealers Association.
With the biggest automakers spinning stories of imminent peril, local dealerships are concerned about maintaining their places in OC’s economy.
The county’s 140 or so dealers employ about 13,000 people. That’s a lot of payroll and a lot of families, Sackrison said.
Dealers also generate big sales tax revenue for cities. In all, dealers contribute $68 million in tax revenue, including payroll tax, sales and other taxes, for the county.
The rocky economy has dealerships asking a lot of questions: When is consumer confidence going to return? How will automakers retool?
There are a lot of unknowns, Sackrison said.
There is one thing that Sackrison does know: Dealers prefer federal financial assistance to bankruptcy, he said.
“You don’t know if an organization is going to come out of Chapter 11,” Sackrison said.
Dealers have had to cut staff and reduce inventories, among other cost cutting measures. There are likely to be some dealer closures in the next six months, Sackrison said.
But most will survive by adapting to the changing market, he said.
“They’re entrepreneurs,” Sackrison said.
President-elect Barack Obama appears to prefer a rescue plan, so long as the automakers come up with a viable business plan that makes the auto industry sustainable for the long term.
Holiday Shopping Season
With retailers still tallying receipts from Black Friday, market watchers are predicting a subtle rise in sales this holiday season.
The National Retail Federation is projecting a 2.2% rise in holiday sales this year to $470.4 billion, below the 10-year average of 4.4%. The forecast is higher than 2002, when holiday sales rose 1.3%.
Gift cards are expected to be big. Some local malls have added incentives to buy gift cards. For example, Shops at Mission Viejo is offering a gas rebate when shoppers purchase a certain amount of gift cards.
Tough October
October was the worst it’s been for retailers in 35 years, according to Clain’s Real Estate & Banking Briefs LLC, based in Idaho. Clain Brandt, principle of Clain’s Real Estate & Banking Briefs, says economic recovery could take up to 36 months.
Same-store sales declined 0.9%, but largely were buoyed by Wal-Mart Stores Inc., according to the International Council of Shopping Centers in New York.
Excluding sales at Wal-Mart, the month was even worse, down 4.2%, according to Clain’s.
The luxury sector was hit hardest, with sales down 19%. Sales for stores catering to teens were down 11%.
South Coast’s Penthouse
South Coast Plaza officially debuted its 20,000-square-foot wing on the third level, which it calls the penthouse. It features stores found nowhere else in the county: Christian Louboutin, Canali, Oscar de la Renta, SoCa St. John and Marche Moderne, a French restaurant.
The wing was dubbed the penthouse by Oscar de la Renta Ltd.’s Chief Executive Alex Bolen, according to the shopping center. It is intended to create a more private shopping experience.
Next year, Louis Vuitton, among other stores, is expected to move into the penthouse.
