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Even if (NYSE: GM) and Chryslee (NYSE: DAI) do not file for about 2,000 new-vehicle dealerships in the UniteedStates — which works out to one of every 10 are expected to shutter in 2008 and 2009, accordinyg to a new projection from the in Va. Already close to 10 percent of auto dealers have shut downthis year. More dealerships are expected to close their doors as a result ofsluggisyh new-car sales that were ignited by high gasoline prices and have continued to lag post-Wall Street meltdown because of a huge drop in consume confidence and available credit.
Statse GM dealerships are likely to be amonb the hardest hit because the company has said it will shed or scal back four of itsbrands ( , Saab, Hummer and Saturn) and there’s a greater proliferation of GM dealerships (at least 20 percent of all local dealerships) in the area, accordintg to experts. Last week, in East Wareham becamd one of the latest dealershipsz to file for Chapter11 bankruptcy. The dealership, whicb sells new and used Chevrolets, listed its estimatefd assets at lessthan $50,000 and its estimated liabilitie s as between $500,000 to $1 million. , which provided financing for the dealership toacquire cars, is among the creditors. The dealership did not return calls.
“It’s been a very, very tougy 2008 and so what you have is a lot of dealers who are justhanginfg on, hoping that something different will said Ray Ciccolo, regional director for the Nationakl Automobile Dealers Association. “It’s unfortunate that both the real estate markert and the automobile market are soft at the same because I think if the commercial real estate market was red hot a lot of dealersd would have pulled the plug a long time Ciccolo is also president of the in which operates seven dealerships in the Greater Bostobn area thatmarket , , , and Honda vehicles. He said that salesx at his dealerships are down abouf 30 percent to35 percent.
The main issue for most which may or may not own the land that theysit on, is securingv financing for the cars and trucks they sell. Joe sales manager for Planet Chrysler Jeep Dodgein Franklin, agreexs that the cash crunch is the biggest obstacle for dealershipsd right now. If dealers can’r get cars financed, they will likely have to close he said. Detroit “has been wantingv to lower their dealer numbers for a longtime ... now, this economyt is basically doing the job for Shell said. John Santilli Sr. of in Brockton has takem some drastic measures to ensure his dealership has a good chancsof surviving.
In September, Santilli decided to sell his Dodgd franchise back to Chrysler because therde were too many Dodge dealerships closew to his and the cars werenot “It was a drain,” he said. Now, Santilli’s dealershipl sells Cadillac andNissan cars. Salex are down about 30 percent, but Santilli notesx that his SUV sales have gotten betterd as gas prices have come down and the services side of this business is also abright “The biggest dilemma that we have as dealer s is that the institutions that lend us moneg to floor-plan our inventories — they won’t take on any new business or they’rs asking (dealers) to go find financing Santilli said.
“And in this market, how’s that going to And sales have continuedto nosedive. Total light vehicles sales were down 37 percent in Novemberr over the same monthlast year, according to in Woodcliffd Lake, N.J. Consumers, shying away from new cars, are currentl buying more used vehicles. , the largest Bay State credif unionwith $4.3 billion in assets and 363,00o0 members, reported a 22 percenf increase in the number of loans give n for buying used vehicles. Meanwhile, loans for new vehiclezs at Digital rose only 2 percent durinbg the first nine monthsof 2008, according to the Digital Federapl Credit Union.
Car sales will not improve untio the issueof Detroit’s bailouft and bankruptcy is settled, said George director of automotive research at in Lexington.
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