Auto Dealership Closures Continue

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In May, bankruptcy court allowed Chrysler to close approximately 789 or 25% of its authorized dealers. Prior to bankruptcy, there were about 3,181 authorized Chrysler dealerships.  List of Chrysler auto dealer closures

Visteon and Metaldyne, both auto parts manufacturing corporations also  filed for bankruptcy in May.

In June, bankruptcy court approved General Motors plans for the eventual closure of about 42% or 2,600 of its total 6,200 authorized dealers. It is unclear what will happen to approximately 470 Saturn, Hummer, Pontiac and Saab dealers after GM sells off these brands. The company further expects to lose another 10% due to attrition.  List of GM auto dealer closures

Bankruptcy court has made the closure of dealers a much easier process however Ford has also been closing dealerships over the last two years. It is estimated that a total of 600 authorized Ford dealers will close by the end of the decade. Currently, Ford has approximately 3,430 authorized dealers.

American auto manufacturers continue to claim that the closure of auto dealerships will help them become more competitive against foreign brands in the U.S. With an overabundance of dealerships; competition forces dealers to lower prices. Furthermore, dwindling profits have resulted in the inability for many dealerships to make upgrades to facilities and attract quality personnel. For example, Toyota (1,235 dealers), Nissan (1,067 dealers) and Honda (1,030 dealers) have substantially less authorized dealers in the United States.  Auto Manufacturer Information (Source: Associated Press)

It is clear that online marketing will become even more crucial as consumers unable to visit multiple dealer locations within a comfortable driving distance will become even more dependent on third party auto websites for research and dealer specials.

National Automobile Dealers Association and All About Cars Online among others support the bill opposing closure of dealerships (H.R. 2743/ S. 1304). The House of Representatives has inserted language into its annual spending appropriations bill that would “restore the economic rights of the dealers before the bankruptcies, ensure they have the right to recourse under state law and require the two automakers to reinstate franchise agreements before the bankruptcies” (Reuters). The Obama administration has made it clear that it does not support provision and support in the Senate is weak.

The public is encouraged to call their representatives and urge them to support House of Representatives bill 2743 and Senate bill 1304 at (202) 225-3121. The President’s office contact information is (202) 456-1111.