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
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