We may be witnessing the end of the auto mall as a cash cow for cities.
Auto sales nationwide are half what they were a year ago. Perhaps as many as half of all auto dealerships will go under in the current economic downturn. Car buyers have shifted their browsing to the Internet with amazing speed. And they're buying cars from anybody they don't have to haggle with – no matter where the sellers are.
As I suggest in my current Economic Development column in Governing magazine, auto malls may soon suffer the fate of general merchandise retail malls. Once they were impregnable fortresses of transactional commerce. Now they're beginning to wither away. So, as with retail malls a decade ago, cities will face a choice with their auto malls: They can play defense and try to maintain a strong position in the withering marketplace of car sales, or they can figure out something else to do with the land freed up by failed auto dealerships.
Sacramento may be the first place where all this is playing out. The market is dwindling, and the two dominant auto centers – Roseville and Folsom – are beginning to suffer. Recently, the city and county governments of Sacramento made common cause against these suburban auto malls by agreeing to a sales tax sharing system for auto dealerships. The truth, however, is that this is not regional cooperation; it's circling the wagons. Wouldn't it be ironic if sales tax sharing finally came about after many years of political battles, but only to protect withering auto malls from dying entirely?
– Bill Fulton
