Number Of Car Dealers Down By More Than 10,000 Since 1970

December 28, 2009 by Douglas A. McIntyre

There were 30,800 car dealerships in the US in 1970. There were 20,770 in the country in 2008 and that was before hundreds of locations where closed by large car companies, particularly GM and Chrysler. The dealership count could be down by as much as 40% from 1970 if those closings are included.

Employment by car dealers could easily be down by 500,000 since 1970 and that assumes each dealer closed had only 50 employees. The rise in unemployment from shuttered company franchises is collateral damage from the huge hit industry unit sales have taken and competition from overseas, but that damage is almost certainly greater than most economists recognize.

The number of dealerships in the US is not likely to rise just as the number of blue-collar car workers at car companies is not likely to increase. Auto manufacturers have cut capacity to a level that gives them some flexibility in production in the event that sales rise, but the employment and factory cuts that The Big Three have made to improve margins are not going to be reversed. Large excesses in capacity almost ruined the US car industry and the companies in it are not going to make the mistake of increasing factory capacity again.

As dealer contracts with large car companies come up for renewal and auto companies are less inclined to give dealers financial support, the number of dealerships is likely to continue to fall.

Douglas A. McIntyre