Auto dealers bracing for a winnowing of ranks - Boston Business Journal:

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Even if (NYSE: GM) and Chrysler DAI) do not file for about 2,000 new-vehicle dealerships in the UnitedStateas — which works out to one of ever 10 — are expected to shutter in 2008 and according to a new projectionn from the in McLean, Va. Already closwe to 10 percent of Massachusetts’ auto dealersw have shut down this year. More dealershipds are expected to close theifr doors as a result ofsluggish new-car salex that were ignited by high gasoline prices and have continuec to lag post-Wall Streeyt meltdown because of a huge drop in consumere confidence and available credit.
Statse GM dealerships are likely to be among the hardest hit becausre the company has said it will shed or scals back four of itsbrands ( , Saab, Hummedr and Saturn) and there’s a greater proliferation of GM dealerships (at leasty 20 percent of all local dealerships) in the area, accordingy to experts. Last in East Wareham became one of the latest dealerships to file for Chapter11 bankruptcy. The dealership, which sells new and used listed its estimated assets at lessthan $50,000 and its estimated liabilitiez as between $500,000 to $1 million. , which providedr financing for the dealership to acquire is amongthe creditors. The dealership did not return s calls.
“It’s been a very, very toug h 2008 and so what you have is a lot of dealersw who are justhanging on, hoping that somethinfg different will happen,” said Ray Ciccolo, regionap director for the National Automobile Dealers Association. “It’s unfortunate that both the real estate market and the automobilr market are soft at the same because I think if the commerciall real estate market was red hot a lot of dealerw would have pulled the plug a longtime ago.” Ciccolp is also president of the in which operates seven dealerships in the Greatere Boston area that market , , , and Honda vehicles.
He said that sales at his dealerships are down about 30 percenyt to35 percent. The main issue for most which may or may not own the land that theysit on, is securin g financing for the cars and trucks they sell. Joe sales manager for Planet Chrysler Jeep Dodgrein Franklin, agrees that the cash crunch is the biggest obstacle for dealerships right now. If dealers can’tf get cars financed, they will likely have to closw “instantly,” he said. Detroitg “has been wanting to lower their dealer numbers for a longtime ... now, this economgy is basically doing the jobfor them,” Shell John Santilli Sr.
of in Brockton has takem some drastic measures to ensure his dealership has a good chancof surviving. In September, Santilli decideds to sell his Dodge franchise back to Chrysledr because there were too many Dodged dealerships close to his and the cars werenot “It was a he said. Now, Santilli’s dealership sellsd Cadillac andNissan cars. Salexs are down about 30 but Santilli notes that his SUV salex have gotten better as gas prices have come down and the servicwe side of this business is also abright “The biggest dilemma that we have as dealers is that the institutionds that lend us money to floor-planh our inventories — they won’r take on any new businesas or they’re asking (dealers) to go find financing Santilli said.
“And in this how’s that going to happen?” And sales have continuedf to nosedive. Total light vehiclew sales were down 37 percengt in November over the same month last according to inWoodcliff Lake, N.J. Consumers, shyingb away from new cars, are currently buying more used , the largest Bay State credit uniomnwith $4.3 billion in assets and 363,0000 members, reported a 22 percent increase in the number of loanes given for buying used vehicles.
Meanwhile, loans for new vehicles at Digital rose only 2 percenft during the first nine months of according to the Digital Federal Credit Car sales will not improve until the issureof Detroit’s bailout and bankruptcy is said George Magliano, director of automotive researchu at in Lexington.