The National Automobile Dealers Association Chairwoman, Annette Sykora, told journalists today that in light of global economic difficulties, the dealer group anticipates 700 car dealerships will close their doors for good. That 700 store figure represents about 2 percent of all car dealerships across the United States.
Nearly 94 percent of new car buyers finance their purchases, according to the Detroit Free Press, meaning that, as securing financing becomes more difficult, fewer buyers will walk out of showrooms with new cars. NADA reports that many dealers have been unable to obtain bank financing for buyers with FICO credit scores above 700.
“Dealers who have been in business for decades say they have never seen anything like this before,” Sykora told the press.
Even large dealership groups like Autonation have suffered dramatically. The question haunting NADA is just how many car dealers will be able to weather the storm.
10/07, 9:52 PM
posted by:
johnnycanuck
Can anyone else hear the sound of two marbles in a coffee can?
10/07, 10:07 PM
posted by:
FRANKE_D
Am I the only one who finds it really weird to see a Mazda 3 picture in this article? I doubt there will be many Mazda dealers that will close in that 700 number. I would understand to see a Chrysler, GM or Mitsubichi, but not a Mazda? Is LLN tring to create something here?
10/07, 10:10 PM
posted by:
manarc250
700 down many more to go. I predict that most all of the 700 dealerships are from the Big 3. I doubt one Toyota dealership will close. I am a huge fan of the big 3 and don’t care much for Toyota, but Toyota’s business model in regards the the dealer body is smart. Sell the same number of cars through a dealer body a third the size. This allows the franchises to be profitable and the facilities to be well kept. As more and more domestic franchises close their doors, as long as their market share does not continue to fall it will make better dealers once the economy turns around.
10/07, 10:21 PM
posted by:
autonut
There is a lot to be learned from Toyota (and Honda and Nissan-Renault).
10/07, 11:58 PM
posted by:
02WRXPSM
The dealerships that will close are the Power-style megadealerships that have 13 types of cars under one roof. Those huge, football-field-size dealerships are so hostile to consumers and intimidating, and they offer too many choices near the same price point. Furthermore, by design those dealerships must carry the most inventory. Next to fall will be dealerships that (obviously) specialize in trucks and SUVs, of which we have many in my area. And with credit harder to get, a lot of the sell-to-bad-credit dealers (Duck, CarMax, etc.) will also go away, because their customers won’t be able to float a loan.
10/08, 2:54 AM
posted by:
howsmydriving
Can’t say I feel sorry for the sociopaths who work in automobile sales.
10/08, 9:13 AM
posted by:
kitko
FRANKE_D, no, you’re not alone. Using a picture of 1 car of 1 brand in what’s a general automotive article is inappropriate and is either unprofessional or intentional.
10/08, 12:25 PM
posted by:
FRANKE_D
howsmydriving, would you care to elaborate a little bit more on sociopaths? Are you afraid to walk in a dealer? are you 79 years old?
I am not a car salesman, but I hate to see people generalize. This may come as a shock to you but not all people that are not american are terrorists. Just saying…
10/08, 1:12 PM
posted by:
shaver
Even sociopaths need to make a buck, better they are selling cars then being police, teacher or nurse.
10/08, 2:24 PM
posted by:
yarddog82abn
“many dealers have been unable to obtain bank financing for buyers with FICO credit scores above 700.”
LLN I RELIVE YOU HAVE A MISS PRINT,
A FICO SCORE ABOVE 700 IS WHAT WE IN CAR CAR BUSINESS CALL “GOLD-BALLS” MEANING YOU WALK OUT WHIT ANY THING YOU WANT AND ZERO DOWN, AS LONG YOU CAN AFFORD THE PAYMENT… NOW IF YOU WERE TO SAY A FICO SCORE UNDER 560, THEN THAT’S WHEN YOU HAVE TROUBLE OBTAINING FINANCING, THE BANKS WANT “CASH UP FRONT”, THEY SET THE RATE BECAUSE YOU ARE NOW CONSIDERED A “HIGH RISK” TO THEN, AND THEY “CAP YOUR PAYMENT”, AS FOR 00 DEALER CLOSING THERE DOORS, WELL IN THE TIMES WE ARE IN A LOT OF BANKS ARE CLOSING THERE DOORS TOO…… SO IT’S NOT JUST DEALERS, THE MORE OVERHEAD YOU HAVE, THE MORE MONEY IS NEEDED TO KEEP THE DOORS OPEN, AND THAT IS IN ANY BUSINESS…
10/08, 2:25 PM
posted by:
yarddog82abn
^^^ I MEANT TO SAY BELIEVE…^^^
10/10, 1:23 PM
posted by:
thinkaboutit
Howsmydriving, I am a little concern with your comment as I am in the car business, but no longer a sales person I an now in the financing part of it. Some car sales people have bad raps, but not all of us. I love selling cars, especially when I know that person(s) is over joyed with their new purchase. i would appreciate a little more decency from people who have no idea what they are talking about.
Yarddog82abn, they are right about the FICO scores, being in the F&I part of the business I have come across Top Teir credit scores in the past couple weeks and have had to make calls to get them done. They are closing up and you can hardly run any negative equity into them now as well.