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The automobile industry has been plummeting, which directly relates to the falling economy, and the governments bailout of the auto trade. This results in dealerships all
across the country closing their doors on their businesses.
In November 2008, statistics showed that 1 in 30 new car dealerships would cease selling with forecasts showing 1,000 to close in 2009. The country has 21,000 new car dealerships
that have not shown a profit since 2006. These failures are due to high gas prices and falling home values. With Americans holding onto any money they earn, car purchases are
stalled. Reports show that the number of auto loans that were more than 30 days late has doubled since 2004. This startling statistic, shows that consumers are unable to pay
their bills on time, and or that they are using their car payment to pay for other bills, such as their mortgage.
Dealerships that sell vehicles made by Chrysler, Ford and GM are suffering the most since the auto industry bailout was approved in 2008. The profits that these companies
once enjoyed are down and their factories are faced with layoffs and reduced pay rates. Once recovery is noted in the industry, the only dealerships that stand to come back
around are those that sell used vehicles. Consumers are no longer willing to risk financing a purchase, especially one with such depreciation. These same consumers are
also clenching their pockets, and are only looking for what is needed.
When dealers are not making money, they cut corners with financing. New advertising shows extended loan periods with lower interest in an attempt to attract buyers. Dealers
are also encouraging their salespeople to extend vehicle servicing sales, while that market is not declining. Owners still need to have their vehicle serviced and repaired,
and this money accounts for 40% of a dealership's revenue.
Forecasters feel that the market will improve for car dealerships but that it won't happen anytime soon. The housing market has to improve first before consumers loosen the
grip on their finances. Dealers still continue to advertise hefty rebates and softer credit requirements to get consumers in the door. It's clearly a rough time for
car dealerships.
