The number of dealerhips that went out of business in 2008 totalled just over 1,000. That’s the steepest drop in nearly 30 years. There are roughly 20,500 dealers in operation today, down 4.7% compared to last year. Most of the dealerships out of business are part of the Detroit 3 (GM, Ford, and Chrysler).

Here’s a 10 year graph showing the accelerating pace of dealership closings:

So are all these dealerships going out of business a good thing for car buyers? Yes and no. For the time being, the anser is yes. Dealers are going out of business because demand for cars has dropped by at least 30%. On top of that, credit has dried up so dealers are having a hard time financing their inventory.

But as more and more dealers go out of business, the ones remaining should find themselves in a healthier business environment. They will have less competition and will be able to charge higher prices (especially if there aren’t many dealers near them).

For the time being, dealers are really desperate to sell cars. If you can afford a new car, now is the time to buy. We recommend you get a free price quote to see what kind of deals your local dealership is offering along with the latest incentives and rebates.

Filed under Dealerships.