Auto bailouts of a smaller variety

Small towns are coming to the rescue of their local car dealers


 

If an auto bailout is okay for the federal government, why not for a small town? Victorville and Norco, two small California towns, recently handed out loans to rescue a few of their struggling car dealers.  Norco gave US$500,000 to both a local Mazda and Dodge dealership. For the towns, which have been struggling with home foreclosures and a failing construction industry, the dealerships are crucial pieces of the local economy. Victorville’s mayor says they are the largest source of sales-tax revenue. So while some argue the towns are going down a slippery slope with these loans, others say they can’t afford not to support the dealers. And with over 1,000 dealerships expected to close across the U.S. this year, there could be many more small-town bailouts to come.

The Wall Street Journal


 
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