It’s just the beginning for the car dealership slide. It started last week with the closing of the largest chain of Chevrolet dealerships in the country, Georgia-based Bill Heard Enterprises, which operated fourteen dealerships in seven states.
On its Website, the company blamed “the declining automobile market, the high price of gasoline and its effects on sales of the dealership’s core products, such as heavy trucks and SUVs, and the difficult financing conditions the automobile industry as a whole has faced because of the subprime lending industry collapse, all contributed to the decision to close the facilities.” Approximately 3200 employees will be laid off.
The damage looks like it will go well beyond the Heard empire.
Bloomberg: U.S. new-vehicle dealership closures may rise as much as 40 per cent this year as slumping sales and surging borrowing costs cut into profits, the National Automobile Dealers Association said today.
As many as 600 may shut down or consolidate with other dealers, equal to about 3 per cent of the total, said Paul Taylor, an economist at the McLean, Virginia-based group. That compares with 430 a year ago.
Dealers that sell cars from General Motors Corp., Ford Motor Co. and Chrysler LLC probably will account for the bulk of the closings, Taylor said. Americans have tightened spending as gasoline prices hover at record levels. At the same time, dealers are paying higher interest rates to get cars on their lots, shrinking profit margins.
“There are more dealerships out there than there are cars to sell,” Taylor said in a telephone interview.
The U.S. had 20,770 new car dealerships at the start of 2008.
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