Drive down the El Camino Real in Menlo Park and, within one mile, you’ll see five vacant auto dealership buildings.  Earlier this year they housed healthy long-time businesses.  In Marin County, one dealership closed recently, a second was approaching bankruptcy.

In years past, when a dealership failed, there was generally an optimistic new operator to take over.  Or the manufacturer would take over the store until an operator could be found.  Today, the manufacturers have huge financial problems of their own, precluding their ability to bail-out dealerships too.  The supply of optimistic new dealer prospects has dried up.  So the likelihood is that those failed stores will never reopen.

There have been too many dealerships competing for too few buyers, especially for the domestic brands.  But the big, well-located stores the manufacturers need to survive are more likely to fail than little, old, low volume stores in secondary markets.

It’s unlikely that new private capital can be found to re-open those failed businesses.  Other uses will be found for the buildings, which are usually in prime locations.

But the loss of those sales points means that the makes represented will lose most of the sales they might otherwise have expected.  There’s less brand loyalty than ever before, and a customer who might have purchased a Buick will probably be perfectly happy with a Toyota Avalon, BMW 3-series, or Infiniti.

What effect will the loss of these sales outlets have on our auto manufacturers?  There are two classes of manufacturers in the US: the sick ones – GM, Ford and Chrysler – who have been virtually destroyed by the UAW, plus their own arrogance, and the healthy ones who don’t have to spend their time fighting that union.  These include Toyota, Nissan, Honda, BMW, Mercedes and other overseas-owned companies who won’t deal with the UAW.  The (former) Big 3 will likely not survive in their present form.  They have too many obstacles; dying brands, dying dealers, money problems and consumer defections.  A wild speculation: maybe Ford and GM will merge, keeping the only good brands they have left – Ford, Chevrolet and Cadillac. Chrysler might join the Renault-Nissan worldwide alliance, keeping Jeep and Dodge trucks alive.

It’s too bad the car companies didn’t follow the strategy of Caterpillar, the heavy-equipment manufacturer of Peoria, Illinois.  In the early 90s, Caterpillar bargained hard with the UAW to control wages, work rules and productivity.  The Caterpillar executives were called every bad name the UAW members could think of during a long, bitter strike.  Finally, the strike was settled, more or less on Caterpillar’s terms.  Result: Caterpillar is healthy, has a huge US-based manufacturing operation, a big export business and the UAW members have jobs!

In spite of all they have been through, the “Big Three” are finally turning out some quite desirable models. 

The GM Cadillac CTS compares favorably with the best cars from Germany and Japan.  It’s also priced very competitively, undercutting most of the competition.  Cadillac’s fuel consumption, performance, quality ratings and design are all at top levels.

GM’s Chevrolet Corvette is the world’s best bargain for high performance, giving Ferrari-like performance, bulletproof reliability and technical simplicity.  They’re so good that specially-prepared cars have run with and often ahead of Ferraris and Aston Martins in races like the 24 Hours of LeMans.

The Chevrolet Malibu family sedan has been totally redesigned so that it can face Toyota Camrys, Honda Accords and Nissan Altimas in a fair contest.  Its four cylinder six-speed automatic engine/transmission combination is remarkably smooth, powerful and economical.

Engineering for the larger, rear-drive GM cars is now done in Australia.  GM Australia manufactures the new Pontiac G-8, a BMW-like sedan with a Corvette-type engine, and a chassis that gives this Pontiac a BMW feel on the road.  Driving it around a race-track, one can tell it’s very capable.  I had a chance to drive it back-to-back with a new Maserati Gran Turismo, and the Pontiac wasn’t embarrassed.  On top of all this, it’s a very tasteful design, with a bargain-price tag of about $30,000.

There’s been a lot written about Detroit’s over-reliance on pickup trucks.  They must not have been too stupid because Toyota opened a zillion-dollar factory in Texas last year, specifically to enter the US-type big pickup market.  The best they could do was a truck that more-or-less equaled Chevy’s best.

Over at Ford, they haven’t been asleep either.  About the time you read this, the Ford Flex will be hitting the showrooms.  For $28,000-40,000 (depending on options) this styling blend of Range Rover and Mini-Cooper (!) may be the hit of 2008-09.

The Ford pickups are just as good as Chevy’s and Toyota’s.  And the Mustang may be America’s longest running favorite, available brand new (in basic but acceptable form) for as little as $16,000; what a bargain!  Shelby and Roush versions cost three times as much, and they’re worth it, with their combination of bold looks and performance.  These are the collector cars of the future!

The Chrysler group is about half-a-step behind GM and Ford, but their new Dodge Challenger, at $40,000, could tempt you away from any of the aforementioned models, with its combination of style and performance.

San Francisco is lucky.  We still have dealerships for most American makes.  If you’re shopping, you might be surprised to find out how good today’s offerings are, and how inexpensive!