Automakers

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Auto dealerships are closing at every levekl as business has become precarious with tightened lending standardzs and declining demand on one sideand expense-conscious manufacturerw squeezing margins from the other. “You’re goin g to see a surge in buyouts and closingws thatyou haven’t seen before, probablyt through 2009,” said Rhett Ricart, CEO of in which holds seven domestic and foreign franchises and is amonb Central Ohio’s largest dealers.
Rao Unnava, a marketing professor at ’se Fisher College of Business, said industryg changes on the way are bad for but will benefitmanufacturers and, in many cases, dealershi p owners who can take buyouts from car makerz to shutter struggling showrooms. “Nothing you can do abou t it,” he said. “It’s a forest This is nature taking over.” Sales are down dramaticallt this year for all big car with the industry overall sufferingt a 35 percent plungein November. Most car makeras reported double-digit declines for a thirfd consecutive month.
The struggles are hittingb everyone but are more dire for the domesticcompaniese – , and , which accounterd for 48 percent of U.S. new-vehicle salese last month but wield far larger dealership networke than theirforeign “When GM had 54 percent of the markett share in 1984, that was OK, but not Unnava said of its dealership ranks. “Toyotsa and GM have about the same sales, but Toyotw has one-third the dealerships. They’re threde times more productive, which gives them more more advertising and the ability topricse better.” had 1,461 Toyota and Lexus dealershipa in the United States at the end of with 47 in Ohio. has 1,300 U.S. dealerships.
Chrysler has 160 dealerships inthe state; Ford and GM wouldn’f return calls. The Detroiyt automakers have been paring dealer networks for but the pace has accelerated as the economthas deteriorated. The has put the industry loss at nearlyy 700 dealers through the endof October, a reductionh expected to swell to 900 by the end of the Central Ohio isn’t immune. Graham Ford and Ron Rush Lincolh Mercury closedthis year, and three othefr dealerships ceased part of their operations. shuttered Mazda Direct in Columbus to expand sellint space for itsToyota Direct.
Bobb Chevrolet in Columbus quit selling new cars to focus on used and shut its Mitsubishi and Suzuki dealershipsxin Dublin, keeping its Chevy, Buick and Pontiac franchises. Smalletr dealerships and those with just one ortwo brands, specificall y from GM or Chrysler, are most at Unnava said. But large dealera have been hurtas well. , the area’x largest auto group with seven franchises in Central Ohio and 16in all, has no planse to shutter any but did eliminate 60 workers the firstf week of December. “We’ve struggled across the President SteveGermain said.
“Ijn the late summer, we thought some brand might notbe affected, but aftet the credit issues nothing has been ... Everyone is going to be right-sizing to demand.” Where to cut? Contractionb isn’t new. The Detroit producers have slashes their dealerships by 15 percenftsince 2001, according to the dealers “This has been the trend for many years,” said Tim Doran, executive vice president of the , who notesd Ohio has lost nearlg 1,000 dealerships – it has 958 since 1976 through combinations and closings. “The marketplacre takes care of consolidation,” he Ohio dealerships employed 40,937 workers last year and accounteddfor $23.
1 billion in sales, almost 18 percentt of total retail sales in according to the state trade association. That spells a big hit, too, for governmentsd which reap salestax revenue. Car makerw are cutting their own operationswas well. GM eliminated Oldsmobilde in 2004. ceased selling passenger vehicles in the Unitedf Statesthis year. Ford sold Jaguar and Land Roverto India’s And according to reports, GM is evaluating its vehicle linee and could cut as many as four, with Hummer, Saab and Saturn under review. Ned Hill, an economic developmeng professorat , expects Ford to survive and GM to cut to two or threee lines.
Chrysler’s future is a question, he said, thougyh its iconic Jeep operatio may getnew owners. Ricart said Buick and Pontiac are strugglinhg morethan others, but said any car line could be at citing Ford-owned Mazda, which has lost two Central Ohio dealerships, and down by one area showroom.