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Car dealers getting a rough deal

A vacant used car dealership in Fairfield, Calif.

TEXT OF STORY

Steve Chiotakis: Carmakers GM and Chrysler have gotten billions in federal loans,
but a bailout for auto dealers isn't in sight. They're meeting in New Orleans for their annual convention. But while being in the "Big Easy" is fun, the underlying theme is how uneasy things really are. More now from Marketplace's Dan Grech.


Dan Grech: Detroit automakers say they want fewer car dealerships. Too many dealers means too much discounting. That reduces the value of the brand.

Normally, an automaker would need to pay millions to buy out a franchisee. But the recession is doing the dirty work for them. Nine hundred dealerships around the country closed their doors in 2008.

And that's just the beginning, says Michael Robinet with CSM Worldwide, an industry consultant:

Michael Robinet: There's no doubt that we're going through an unprecedented loss of dealers right now with the reduced sales volume as well as the lack of credit.

Robinet says this is a painful but needed correction.

Robinet: Going forward, we're going to have a much stronger set of dealers in the United States that are going to be able to withstand similar sales declines in the future.

The National Automobile Dealers Association doesn't want to lose any of its 18,000 members. It's using its national convention to ask for government assistance to weather this bumpy ride.

I'm Dan Grech for Marketplace.

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But at least the price of cars can continue to increase.

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