Nearly 1 in 5 car dealerships could fail: study

[Eugene]

Source: Reuters

Nearly 1 in 5 car dealerships could fail: study
Wed Oct 1, 2008 12:51pm EDT

DETROIT (Reuters) - As many as 3,800 U.S. car dealerships
could fail this fall and into 2009 -- nearly one in five --
because of weak sales, increased operational costs and the
credit crunch, according to a forecast released on Wednesday.

"An increasing number of dealers are simply closing their
doors because sales have plummeted, credit has dried up, the
overall retail environment is increasingly challenging and
potential investors are sitting on the sidelines," said Paul
Melville, a partner with Grant Thornton LLP, which issued the
forecast.

"In addition, the domestic automakers who badly need retail
consolidation are not spending much of their scarce capital
on the problem because the economy is doing it for them," he
said.

-snip-

With U.S. light vehicle sales predicted to drop to the 13.7-
million-unit range in 2009, the study said that about 3,800
dealerships, about 18 percent of the total number of U.S. car
dealerships at the end of 2007, will need to close.

-snip-

Read more: http://www.reuters.com/article/domesticNews/idUSTRE49069R20081001

[napi21]

1. And that's supposed to be a surprise? Car sales have been slumping for a

LONG TIME! Gas prices have forced sales down even more, except for some hybreds, auto inventories have skyrocketed, and I'm surprised the dealerships have been able to hang on THIS LONG and still pay their bills!

[TooBigaTent]

2. Never did understand the thought process that said you have to have a new car every two

years, whether you could afford it or not.

Just another nail in the American consumerist coffin.

[YOY]

3. New technology needed

Replacement for the combustion based mode of transportation. Certain vehicles can swap out that power source...trains for example as well as ships.

Cars (mass produced) and air flight (I foresee some problems using batterys...perhaps just me.) are going to have to be completely redesigned and will create a new industry to replace the old just as the DVD(now supposedly the Blue-Ray) replaced the VCR.

If we are the first mover we could dominate the industry. We can re-build up the dealerships worldwide in response.

[Ah Xoc Kin]

4. there are too many cars

invest in mass transit
and stop putting vast greenspaces between buildings

[bhikkhu]

5. The same cause and effect as gas stations closing?

In my town about half of the gas stations within 40 miles have closed in the last five years or so, including virtually every single "along the way" station. All that are left are ones in town, anchored to big intersections and main shopping roads.

I imagine the dealerships are in a situation of being squeezed tight - no "fat" left in the market, and it only takes a little bit of a sales decline to crash.

[Art_from_Ark]

8. I see the same thing in Japan with the gas stations

Lots of the "along the way" stations have folded in the last 5 years. But even ones at big intersections and on main shopping roads have folded. And the car market in Japan is pretty saturated-- 60 million vehicles for 90 million potential (18 and over) drivers.

[Warpy]

6. Here in NM, they seem to be hedging their bets nicely

by doing hyphenated dealerships with offshore manufacturers. Since US automakers are still pushing guzzlers and dinosaurs and people don't know that they all make efficient small cars, offering foreign small cars that people do know about keeps them in bread and butter sales.

Single US dealerships suffering from Detroit's insistence on pushing guzzlers that aren't selling only because the profit is higher on them will go under.

There are still new 2007 monster trucks and SUVs on some lots, and they still haven't gotten the message in the board rooms.

[lostnotforgotten]

7. Less Cars Sold, Means Less Cars Over Time, Means Less Gas Consumption

Means Stabilized Fuel Prices.

Seems like more carpooling will be a good thing.