Record 881 U.S. Auto Dealerships Closed in 2008

Washington DC February 23, 2009; The AIADA newsletter reported that a record 881 U.S. auto dealerships closed in 2008, with Detroit's three struggling automakers representing 80 percent of the decline, according to data released last week.

In the face of tight credit and a plunge in sales of cars and trucks, about 4.2 percent of the country's 20,084 auto dealerships shut their doors, according to data firm Urban Science.

According to Reuters, the number of closures, the bulk of which occurred in the fourth quarter, represents the biggest decline since 1991 when the company started to collect data. The lack of credit has made it difficult for dealers to finance their vehicle inventory and for customers to secure financing to buy vehicles.

"There has been a loss of franchises across all the manufacturers, but the Detroit Three have been hit the hardest," said John Frith, vice president at Urban Science. "We'll see even more contraction in the next several years as the Detroit Three strategically rethink their retail counts and locations."