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About 1 in 10 Auto Dealers to Close Next Year, NADA Predicts

December 18, 2008

The National Automobile Dealers Association (NADA) projects that nearly one of every 10 auto dealerships will close in 2008 and 2009. And that's just assuming no automaker files for bankruptcy or goes out of business next year.

The California Motor Car Dealers Association offers an even more dire forecast than NADA. Association president Peter Welch said California lost 116 dealerships in the first 11 months of 2008. The state has just over 1,500 new-vehicle dealerships left. He believes closures will total 150 by year end and predicts as many as 500 closings in 2009. Only 20 dealers closed in all of 2007, he said, while 17 closed this past month alone.

NADA chief economist Paul Taylor says the poor economy, plunging new-vehicle sales and tight credit for dealers and consumers are taking a heavy toll.

At the beginning of this year, Automotive News counted 21,461 new-vehicle dealerships in the United States. By the end of 2008, NADA expects that about 900 will have closed and 200 will have opened, for a net loss of 700. Next year, Taylor predicts 1,100 dealerships will close and 200 will open, for a net loss of 900. "The new dealership openings will be largely offshore brands, including Mahindra and Mahindra of India," he said. Distributor Global Vehicles USA Inc. plans to launch the Indian-import Mahindra light-truck franchise in late 2009.

Taylor says the recession year of 1980 saw a net loss of 1,550 dealerships, out of about 28,000.

Two years ago Joe Pfeffer's Chrysler dealership in Belleville, N.J. was selling 50 new vehicles and 15 to 20 used vehicles per month. In September, his last month in business, Pfeffer sold seven new vehicles and about five used. In October, Pfeffer had to close the dealership and give up the franchise after 67 years in business.

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