Dealership Closings Higher than Expected

Beginning in 2009, there were 20,010 franchised new car dealerships, (ended in 2008), according to the National Automobile Dealers Assn.. At the end of July 2009, the number stood at 19,002 active dealerships.

This year doesn't look much better. NADA Chief Economist Paul Taylor expects the 2009 closure numbers will be higher than originally projected. NADA expects 2,200 dealer closings in 2009, vs. 1,200, due to the adverse economy and bankruptcy filings at General Motors Co. and Chrysler LLC

“The net dealership count at the end of 2008 fell by 760 dealerships from the current count of 20,010 franchised new car dealers. Closures were actually 960 with 200 new openings (in 2009),” Taylor says.

Economic factors were expected to close at least 1,200 dealerships in 2009, “due solely to the adverse economy and difficult credit conditions for new car dealers and their customers,” says Taylor.

Recent actions by Chrysler and GM “assure that at least twice as many dealerships (2,200) will close compared to the (earlier) 1,200 estimate of closings just because of credit and sluggish economic activity during 2009,” he says.

NADA had projected 900 dealership closings in earlier reports. These were somewhat balanced by new openings.

The numbers are based on NADA member counts. NADA had 93% of new car dealerships as members in 2008, Taylor says.