February 10, 2009

Auto dealers see survival as the goal

A severe slump in automobile sales is likely to push 900 U.S. auto dealerships out of business in 2009, a trade association said.

The National Automobile Dealers Association predicted the number of dealerships will decline further than the 760 dealerships lost in 2008, USA Today reported Tuesday.

There are an estimated 16,000 to 20,000 U.S. dealerships and not enough sales to support them all, the newspaper said.

In 2008, sales fell 18 percent from a year ago to 13.2 million vehicles, the worst year since 1992. Sales this year are projected to fall to 10.5 million, the newspaper said.

The numbers tell the tale. Domestic sales peaked at 80 percent of all U.S. sales in 1984. Currently, the market share commanded by General Motors Corp., Ford Motor Co., and Chrysler LLC is about 50 percent of the U.S. market.

At the same time, dealership profits have dropped in half to about 3 percent of each sale, GM, Lexus and Infiniti dealership owner Carl Sewell told USA Today.

We simply can't keep doing business that way, Sewell said.

For 2009, the whole goal is to be here a year from now, AutoNation Chief Executive Officer Mike Jackson said to the newspaper.