The closing came as a surprise and a disappointment to Cupertino City Manager Dave Knapp. He was officially notified by Anderson's parent company, AutoNation, but said he doesn't know why the dealership closed.

Paul Weiss, the owner of the land where Anderson operated, would only confirm that "they have time on their lease, but I don't know why they went out of business. It's not my place to speculate," he said.

Whatever the reason, Knapp says it's a blow to the city. "A car dealership is an outstanding commodity to sell in your community," he said. "From a sales-tax standpoint, you like to sell an expensive commodity." The sales tax on a $25,000 car would net the city $250. "You have to sell a lot of ice cream cones to make that up," Knapp said. He said the closing is especially tough since it comes at a time when the city is trying to make up an estimated $4 million budget shortfall. One-third of the city's revenue comes from sales tax.

Knapp couldn't say how much tax revenue Anderson has generated over the years because it's protected information, but he did say, "It's in the hundreds of thousands of dollars."

Knapp also said it's unlikely the city will get involved in determining what type of business goes into the Anderson lot. He said it's zoned for a wide variety of businesses, such as machine shops or automotive-repair facilities. "The city would only get involved if a new business required a zoning change," he said.

Emails and phone calls to AutoNation were not returned. Nor did the International Association of Machinists return phone calls. IAM Local 1101 represented many of Anderson's employees.

An employee at Anderson Chevrolet in Los Gatos, who asked not to be identified, said many of the workers went to other shops owned by AutoNation, including the Los Gatos dealership and Anderson Chevrolet of Menlo Park.

As of March 31, AutoNation owned 368 car dealerships nationwide. That company's most recent quarterly income statement, filed in mid-July, showed a net income of 35 cents a share. The income statement said that figure dropped to 34 cents after budgetary considerations, including store closures. AutoNation CEO Mike Jackson addressed the issue in a press release, saying "The economic environment for American retailers in the month of June was particularly challenging, led by a 1.1 percent decline in retail sales, the largest drop in 16 months."

Competition is stiff, too. In 2003 eBay Motors sold 450,000 vehicles over the internet. An eBay spokesman said that based on the company's second quarter earnings this year, eBay Motors is on track to sell as much as $9.8 billion worth of cars this year.