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* APRIL 10, 2009

Auto-Dealer Ranks Dwindled in First Quarter

DETROIT -- In the first quarter of the year, 271 auto dealers in the U.S. went out of business, according to the National Automobile Dealers Association, as car buyers stayed away from showrooms and credit remained tight.

At the end of the quarter, there were 19,738 auto dealers in the U.S., the dealer group said, down from 20,009 at the end of last year. It said it expects about 1,200 dealers, mostly sellers of domestic brands, to go out of business in 2009, roughly 20% more than last year.

Many dealers closed as their lenders tightened terms and costs outstripped revenue, while some consolidated stores or closed up shop voluntarily. Light-vehicle sales in the first three months of the year were down 38%, with sales of domestic brands down 46%, compared with declines of 31% for Asian auto makers and 27% for European brands.

General Motors Corp. said 198 of its dealers closed in the first quarter, bringing its total to 6,177 at the end of March.
[auto dealer closures] Associated Press

In the viability plan it filed with the government Feb. 17, the company said it was looking to trim its dealer network by 25% over the next four years, compared with a reduction of 15% during the four previous years. The company aims to shrink its dealer network to 5,750 at the end of this year and to 4,100 in 2014.

GM is in the process of selling and phasing out several of its brands, such as Hummer and Saturn. Several Saturn dealers have closed as a result, as first-quarter sales of the vehicles plunged 62% from a year earlier.

Chrysler LLC said it shaved dealer numbers by 82 over the first quarter to about 3,218 at the end of March. In the last quarter of 2008, Chrysler, majority-owned by Cerberus Capital Management LP, lost 74 dealers. In its viability plan in February, Chrysler estimated that 27% of its dealers were in financial trouble.

Ford Motor Co. declined to provide the number of dealers the company had at the end of March. Last year, 269 dealers of all of Ford's brands closed, bringing the company's total at the end of December to 3,787.

Some brands are expanding their dealer networks even in the current depressed environment. BMW AG's Mini, for instance, plans to open 13 outlets this year.

LINK:Auto-Dealer Ranks Dwindled in First Quarter -
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