Big Three Auto Dealer Closures Hit 936 in ‘08
It’s no secret that 2008 was a brutal year for the U.S. auto industry. And, according to Automotive News, Detroit 3 dealers felt more than their share of the pain.
Last year, sales by General Motors, Ford Motor Co. and Chrysler LLC dealerships plunged 23.7% from 2007. Stated another way, those dealerships sold 518,469 fewer cars and 1,440,601 fewer trucks last year than they did in 2007 — a total of 1,959,070 cars and light trucks.
At a sales-weighted average wholesale price of more than $24,600 per new vehicle, revenue for the three companies dropped about $48.2 billion for the Detroit 3 last year. Dealership revenue declined about $57 billion, or $4 million per dealership — a lot of money for a family-owned business to kiss goodbye.
The average Detroit 3 dealership sold 112 fewer vehicles last year than it did in 2007.
What did that do to the dealer population? Automotive News finds that 936 Detroit 3 new-vehicle dealerships closed in 2008. The 2008 losses were GM, 380; Chrysler LLC, 287; Ford Motor Co., 269. The figures include only domestic brands.
Automotive News estimates that the number of import dealerships held steady last year at about 7,300 stores — 6,530 exclusives and 800 import-only duals. The Detroit 3 opened 2008 with 14,199 dealerships and now has 13,263.
A loss of 936 dealerships is heavy. But if it’s any consolation, it’s far from a record. Automotive News archives show that the biggest single-year loss since the end of World War II occurred in 1953, when 3,281 stores faded away. The high point for domestic-brand dealerships was Jan. 1, 1949.
The result of the fallout is that a new trend is developing: fewer but larger dealerships. Carmakers have preached that doctrine for years, and their prayers have been answered, though not exactly in the way they hoped.