Dealership cuts to hit real estate: AutoNation CEO

DETROIT (Reuters) - The decision by U.S. automakers General Motors Corp and Chrysler LLC to close over 2,300 dealerships will hurt the commercial real estate market and pressurize vehicle prices, AutoNation Chief Executive Mike Jackson said on Friday.

"It's extremely painful in the short run and very disruptive. It will be a difficult couple of months for everybody," Jackson said in an interview.

"There will be pressure on liquidating inventory, pressure on pricing, pressure on automotive real estate."

AutoNation, the largest U.S. dealership group, received notification from GM on Friday that six of its GM dealerships were identified for possible closure.

The notification is part of GM's announcement on Friday that it is planning to cut about 1,100 dealerships by October 2010. The news came a day after Chrysler laid out plans to cut nearly 800 dealers.

The AutoNation stores impacted by GM's dealer consolidation plan didn't contribute to the group's 2008 operating income, according to the company.

GM's consolidation plan is a difficult but positive step longer-term, Jackson said.

But the dealer closures would especially be another on the depressed U.S. commercial real estate market, which is off more than 20 percent from a year ago.

The meltdown in office and other nonresidential properties has already squeezed U.S. financial companies, with banks from Goldman Sachs Group Inc, to Citigroup Inc and insurers from American International Group to MetLife Inc reporting billions in write-downs.

"It could have an impact on commercial real estate," Jackson said. "This is single purpose real estate that has to change use now. So there will be a lot of that coming at one time."

"And that's going to take quite some time to work its way through the system," he added.

(Reporting by Poornima Gupta; Editing by Richard Chang)