Nearly 1 in 5 US car dealerships could fail-study Wed Oct 1, 2008 12:15pm EDT DETROIT, Oct 1 (Reuters) - As many as 3,800 U.S. car dealerships could fail this fall and into 2009 -- nearly one in five -- because of weak sales, increased operational costs and the credit crunch, according to a forecast released on Wednesday. "An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a partner with Grant Thornton LLP, which issued the forecast. "In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem because the economy is doing it for them," he said. Bill Heard Enterprises Inc, one of the biggest General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) Chevrolet dealerships, filed for bankruptcy on Sunday, citing operating losses, decreased demand for vehicles and lack of credit. At its peak, Alabama-based Heard's revenue was about $2.5 billion per year, according to the bankruptcy filing. With U.S. light vehicle sales predicted to drop to the 13.7-million-unit range in 2009, the study said that about 3,800 dealerships, about 18 percent of the total number of U.S. car dealerships at the end of 2007, will need to close. U.S. vehicle sales are expected to be flat next year with any recovery in demand expected only in 2010, as consumers struggle with tight credit, high gasoline prices and a housing market slump. The drop in demand has been particularly hard for Detroit-based automakers GM, Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) and Chrysler LLC. GM's sales were down 18.5 percent in the first eight months of 2008 while Ford's sales declined 16 percent and sales at Chrysler, controlled by Cerberus Capital Management [CBS.UL], dropped 24 percent. Thornton said apart from new car sales, other sources of revenue for dealers, such as used car sales and financing profits, are also falling.
Perhaps Paulson can persuade Congress into letting him purchase all the cars and trucks and then auction them off to the public?
Registered: Dec 2004 Posts: 13 New Post 10-01-08 12:28 PM Perhaps Paulson can persuade Congress into letting him purchase all the cars and trucks and then auction them off to the public?
While there is truth in the weakening economy, there are other factors that help decide which dealerships close. Up until a few years ago I think I was one of the last die-hard US auto purchasers. I would only purchase US cars and mostly GM. I had noticed in the past decade that the dependabilty of my GM cars appeared be deteriorating and my 2002 Malibu was the last straw. This was the worst performing car from a mechanical point of view that I have ever owned. As far as Bill Heard, I shed no tears. I feel for the people that lost their jobs but I think people got tired of their games because they had many complaints against their business practices (Florida) of which I was also subject to when trying to purchase a vehicle from them. Yes, many other dealerships do some of the same things, I just think that Bill Heard took it to a new level. Joe.
Was Bill Heard one of those guys that used to throw your car keys on the roof and not get them down until you signed the contract on the new car? they used to do that here