June 8, 2009

Bankruptcy will change dealership numbers

U.S. auto dealerships and car prices are likely to increase in size as a result of bankruptcies at General Motors and Chrysler, industry analysts said.

Chrysler is planning to cut 25 percent of its dealerships and GM about 40 percent, as the combined companies reduce their dealerships from about 6,000 to 3,100, The Boston Globe reported Monday.

That means the surviving outlets will likely increase in size and have less incentive to offer deals to customers, the newspaper said.

We're in an evolving business where the strong survive and the weak go away, said Sean McCarthy, a sales manager at a Mastria GM dealership in Raynham, Mass.

GM spokesman Tom Wilkinson said the price of a new GM vehicle will increase between $2,000 and $6,000. Kathy Graham, a spokeswoman for Chrysler, estimated a market driven jump of up to $2,000 in prices.

In specific dealerships, the competition will narrow. The Chevrolet competition is going to be the Ford dealer, the Toyota, the Honda dealer -- not another Chevrolet dealer, said Paul Bertoli, co-owner of Pride Motor Group in Lynn, Mass.