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Aaron Jacoby, Chair of Venable's Automotive Industry group, was quoted in a June 29 article in California Real Estate Journal.

The article cited foreign auto manufacturers as being very selective in defining which markets they needed to be in and locating dealerships in those areas - Toyota and Honda are being used as the prototype that federal legislators want Chrysler and GM to adopt in restructuring their companies.

"Both Chrysler and GM are trying to whittle down the number of dealerships, and they are doing that because either the manufacturer or the government perceives that a distribution network sized more like Toyota or Honda is more efficient," said Aaron Jacoby, a partner in Venable's Los Angeles office.

In addition to having fewer dealers in the auto districts, Jacoby said it is likely that dealers will need less space because they are expected to want to keep less inventory on hand. Dealers that want to maintain smaller inventories, might want to think of some alternative uses such as a restaurant or a go-cart park on their premises, he said.

"I think this will be a gradual shift that occurs as we come out of the recession," Jacoby said. "Right now, I think the dealers, auto manufacturers or suppliers are just looking for ways to cut costs and survive, so the potential for growth will come afterwards."