Economic woes forcing car dealerships to close

Decreasing sales and the credit crunch are dealing the death blow to many car dealerships, which can be economic and civic linchpins in rural areas.

A study released Grant Thornton LLP on Wednesday claims that in the coming months as many as 20 percent of U.S. dealerships could close. Paul Melville, a partner with Grant Thornton, told Reuters, "An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines." (Read more)

Bloomberg, per the National Automobile Dealers Association, reports closures may rise considerably this year. They claim that the rate of new-car dealerships forced to close could be 40 percent higher than last year. Dealerships that sell Ford, GM, and Chrysler will account for the bulk of those closings. (Read more)

Most car purchases depend on loans and with the credit crunch, loans are proving hard to come by. Dean Calbreath of The San Diego Union-Tribune writes, "Auto dealers already have been hit hard by a slowing economy, rising gas prices and a shift in buying trends by fuel-conscious consumers. Now the dealers are being knocked down further by tightening credit."(Read more)

Car dealerships provide important services in rural communities. They are an important source of employment, give money for local organizations, and provides a place to residents to buy and service their cars. As Al Tompkins of Poynter Online writes, "For lots of cities and towns, car dealerships have been big players in civic affairs. They donate to everything from League League events to education efforts." (Photograph by Reuters)