881 dealer closings in 2008 sets new record
Dealerships dropped like flies in 2008, with 881 retail stores resigned to history at year's end. The steep drop in vehicle sales and difficulty finding cash to finance inventories were the main reasons for the record decline, but 2008 won't likely hold that title very long. While vehicle sales dropped 18% in 2008 to 13.2 million vehicles, many analysts are expecting 2009 sales to plunge all the way down to 10 million units. The additional drop in sales, along with domestic automakers' drive to consolidate their dealer networks, will likely make 2009 very difficult on franchises. Predictably, domestic-brand dealers were the hardest-hit, suffering 80% of the overall casualties. GM, Ford, and Chrysler are likely hoping the trend continues through 2009, as Detroit automakers have less than 50% of the US retail market and closer to 75% of the overall dealerships.
[Source: Reuters, Photo by Spencer Platt/Getty]
Reader Comments (Page 1 of 2)
fixitfixitstop 5:16PM (2/22/2009)
I won't miss them. As much as I love cars, there are way too many dealers, and way too much inventory.
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Beastage 5:21PM (2/22/2009)
Yea, with all sympathy this is just how it is... all the plenty of the last 5 years was on borrowed credit money...
MM 8:49PM (2/22/2009)
Here is the one problem with this scenario, As the number of dealers close eventually you will have one or two large dealer groups that own all the dealerships in your town and before you know it, the price of cars and service begin to go up because of a lack of competition.
suicycle.com 9:32PM (2/22/2009)
Wow! I knew it was bad, but that is pretty high number. Just another sector where a lot of working-class people have suffered. MM is right, though, it could soon become monopolistic in a lot of places. New car prices might not get the same amount of discounting that you can find now. Plus, increased service prices could really sting those that are trying to keep their cars going without taking on a new car payment.
len simpson 5:23PM (2/22/2009)
Been in the biz over 50 yrs & I fail to understand why auto financing was allowed to evaporate when the flic of a bic could have easily saved this portion of the disaster. Our "leaders"? are even stupider/greedier than previously supposed.
The situation as a hole would be a whole diffrunt ball game w/ just that one quick move.
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Sea Urchin 6:04PM (2/22/2009)
Financing is provided by private sector. If it disappeared attack private sector. Stop attacking "our leaders", because the second you will start making money you will demand that our leaders stop taxing us.
Government should not lend money to people, that why we have banks and banks do lend money, to those who can afford the loan.
Government is not a solution to your problems, the solutions is for you too find buyers with credit score above 700-750, those Americans who live within their means.
Flashpoint 7:40PM (2/22/2009)
Sea Urchin
CAPITALISM, COMMUNISM, SOCIALISM,DEMOCRACY, REPUBLIC,etc they are all PHILOSOPHIES... for you to say "government is not the solution" you clearly embrace one over the over...fine... but the simple FACT is that no one philosophy is better/worse than the next.
I believe the governments job is to protect our boarders and to protect our national security. Those in power believe this is done through spying on other countries and pre-emptive war.
I believe the government is suppossed to enforce laws and to protect the public trust.
I do not believe that America's sovereignity should be sold out to corporations or "the free market".
True, I don't think the gov should've intervened in this situation, but the truth is, the States get alot of revue from taxation of the property. If lots of properties go under, the state government goes bankrupt. Or it ends up requesting federal funds.
notYou 7:50AM (2/23/2009)
Flashpoint: "CAPITALISM, COMMUNISM, SOCIALISM,DEMOCRACY, REPUBLIC,etc they are all PHILOSOPHIES... for you to say "government is not the solution" you clearly embrace one over the over...fine... but the simple FACT is that no one philosophy is better/worse than the next."
That may work in a textbook, but in the real world here's a simple test:
Generally, do people immigrate to/from Capitalist/Democratic countries or Socialist/Communist countries?
You'll find people dying to get _in_ to the former, and dying to get _out_ of the latter. That speaks volumes.
Flashpoint: "but the truth is, the States get alot of revue from taxation of the property. If lots of properties go under, the state government goes bankrupt"
There's another answer: "spend less".
Kalifornia almost learned it, but it looks like they've borrowed they're way into another year of downward spiral. I'm afriad, there lies the way of the whole of the US.
Ian B. 10:36AM (2/23/2009)
@notYou
Don't let the little fact that HISTORICALLY, most communist countries were run by small groups of brutal men who saw to it that people disappeared in the middle of the night. Yeah, I'm sure that's not a compelling reason to get the hell out.
The rest of the textbook theory, like some other poster mentioned, is human contrived. It has exactly zero in common with natural and physical laws that dictate the world around us. Swiss cheese comes to mind. It didn't exist when our pseudo-ancestor Neanderthals were picking food out of the mud, and it won't exist after our species goes extinct.
jpm100 5:30PM (2/22/2009)
Believe it or not, there was a time before TV. There was a time before freeways.
The best way to advertise was physically being there.
The problem was getting rid of those dealerships and the laws states enacted to prevent that.
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Mobius_1 5:54PM (2/22/2009)
But now we have freeways, TVs and the internet, it is not necessary to have so many dealers anymore. Time for some of them to go.
jpm100 8:36PM (2/22/2009)
Brilliant idea!
Now if we can only change the franchise laws in all 50 states.
Sanders 11:01PM (2/22/2009)
Flashpoint:
Thank you. Your first paragraph resonated with me. Typically, a hardened philosophical stance is indicative of ones' background and education, somewhat like being indoctrinated into a religion--unrelenting and inflexible. I sense you may have a scientific background, and hold many of mankind's contrived institutions at arms length.
Vincenzo 9:17PM (2/22/2009)
Won't it be easier to visit a show to check different vehicles and then buy online selecting the options and color that you want?
It's like visiting a bookstore, finding an interesting book, and buying it on Amazon for half the price.
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ropeburn 6:00PM (2/22/2009)
yeah, I wonder what counts as a "dealer", on Long Island we still have very small lots with a trailer for an office and giant "auto malls" that are along major hwys.
I could never argue that we need more dealers, it seems that they're everywhere.
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Kaveh 6:23PM (2/22/2009)
Its bad that alot of them closed, but after spending a couple years in Phoenix, there was way to many dealers with crazy amounts of on lot stock. I wish I took pictures of the hummer dealer near me, they had bought a used car lot to store there hummers, had to be 50 brand new ones sitting there.
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David B. 6:48PM (2/22/2009)
I would be curious to see whats the percentage of dealerships that closed due to the economy vs. the ones that closed because GM/Ford/Chrysler said they had to. Of course I guess that in its self could be kind of open ended.
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Kumar 7:28AM (2/23/2009)
You're getting at the problem. The big three were more or less powerless to tell dealers to close due to archaic state franchise laws.
Chrysler was trying to limit it's rebadging in order to force dealers to either carry all 3 brands, mergo, or go out of business. Unfortunately, in doing so, they were caught with their pants down with nothing anybody wanted.
If the car is cheaper in another town, tell your local dealer. If they won't pony up, buy it from the other guy and get it serviced back home.
neor 7:07PM (2/22/2009)
Prices will be going up and going up a great amount!!!
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Toledo Guy 7:36PM (2/22/2009)
What? Based on fewer dealers? No way.... not until demand outstrips supply. The big 2 and Chrysler still have too many dealers chasing fewer customers. Add in the current excess supply and you have what we have now. We have a buyers market for those who haven't spent the past 16 years living beyond their means.