Saturday, June 20, 2009

McHenry County Suffers In Car Closings

The loss of tax revenue from shuttered General Motors and Chrysler dealerships only adds to the financial woes of Illinois governments. McHenry County will likely be particularly hard hit. A First Electric Newspaper analysis finds it's suffered double the level of closings of the other Collar Counties on a percentage basis.

Matching 242 new car dealers in the five counties surrounding Chicago against announced and likely (the rest of Pontiac) closings reveals McHenry County has lost 5 of its 25 dealerships, 20 percent. The next worst-hit has been Kane County with a 14 percent loss. DuPage lost 9 percent, Will 8 percent and Lake only 7 percent.
The closing of Huntley Chevrolet will increase the Kane County figure. Although the lot is within Huntley limits it's over the line from McHenry County.

To some degree the tax revenue impact of dealership closings is academic. U.S. auto sales are down 37 percent from their peak so even surviving dealerships aren't generating much in the way of tax revenue. The question is remains, what will the erstwhile customers of defunct dealers do now? Will they remain brand-loyal within the county or county-loyal but turn into Ford fanatics? Or will they take their car business and sales tax dollars to Lake, Cook and Kane counties?

McHenry County Finance Committee Chairman Mark Munaretto believes a large part of McHenry County's current $1 million tax shortfall is due to poor car sales. He estimates sales tax receipts from McHenry County car sales were in the $3-4 million range before the bottom dropped out. The question on his mind, he said, is how much will revenue with return with a recovery."With the loss of these dealers I don't know if we can ever return to the previous levels," he said.

The problem of dealer closings and tax loss is magnified at the muncipal level. Crystal Lake has been particularly hard-hit with the loss of two dealerships. Algonquin and Lake in the Hills have come through unscathed thanks to the former's having only one car dealer, Rosen Hyundai, and the latter none at all.

Algonquin President John Schmitt said his village has neither sought car dealers nor discouraged them. "We've talked to several over the years. For one reason or another they haven't chosen to locate here."
Much the same applies to Lake the Hills, according to Village Manager Jerry Sagona. "We would welcome car dealers to the friendly confines of Lake in the Hills if they were interested in locating here," he said.


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