Car Companies Face Rapidly Deteriorating Dealer Financials (GM)(TM)(F)(HMC)

For over a year, analysts have said that one of the largest problems car companies face is dealers who go bankrupt. It is actually a double-edged sword. If under-performing franchises fold, it can help other dealers in the network. If large dealers fold, a car company could be left without a sales and service outlet in a big city.

Dealer profits fell t0 $349 per employee last year, according to data from SageWorks.

In 2007, the profit per employee was $4,173. Total revenue per dealer in 2008 was $465,556 down from 2007 when it was $620,572. There is a fairly good chance that average profit per employee could be a negative number this year. And no one is bailing the dealers out.

Douglas A. McIntyre