Automakers close car dealers
With new car sales in a slump for months now, increasing numbers of dealers have been forced to close up shop. Recently it was announced that thousands more General Motors and Chrysler car dealerships may shut their doors when the automakers stop supplying them with vehicles because of restructuring efforts.
GM notified 1,124 dealers that it will close them by next year; Chrysler notified 789 of its dealers. That’s about 20 percent of GM’s car dealers and 25 percent of Chrysler’s, according to estimates by the National Automobile Dealers Association.
Those numbers could change as car dealers are fighting before Congress in hopes of preventing closures. So far, neither Ford Motor Co. nor the other automakers have said anything about closing dealerships, and they may not have to. Many have fewer showrooms, such as No. 2 carmaker Toyota, which has only a quarter of the dealerships of GM.
Automakers have said they’ll do everything they can to make sure customers are not affected. But the truth is, if your local car dealer goes belly up, you will be affected.
Just how many car dealers will go out of business in the next year remains to be seen, but consumers can be assured there will be fewer choices, not only for buying a new car but also for service and warranty repairs.
At the very least, you will probably need to drive farther to visit your car dealer. And if you had an established relationship with your current dealership, you’ll have to start forging that bond all over again. As a result, your visits may not be as warm and fuzzy as they were in the past.
You may also find that you need to wait longer for an appointment for regular maintenance, repairs or repairs covered under warranty. While new car sales may be slow, there are still plenty of people who own cars and need work done. If those people previously were split among several car dealers and are now going to a single dealership, it will place greater demand on the service department. Some dealerships will be able to accommodate this easily, but others may not because of a limited number of service bays or restrictions on hours they can be open in their communities, among other factors.
Long waits may be an issue for recalls because all vehicles involved in the recall need to be repaired by a car dealer, not an independent mechanic. Consumers who have problems getting recall work done should call the manufacturer’s toll-free number in the owner’s manual and contact the National Highway Traffic Safety Administration at (888) DASH-2-DOT, or (888) 327-4236, to file a complaint.
If you’ve purchased an extended warranty that is backed by the manufacturer and not a third party, you should be able to see any car dealership in the manufacturer’s network for repairs. If it’s backed by a third party, you’ll likely have other choices beyond a dealership. Extended warranties, sometimes called extended service contracts, cover repairs that occur after the new car warranty expires. Check your contract to learn your options for repair work.
While you may have to deal with these inconveniences, one bright spot is that it’s unlikely you will own a car that cannot be repaired because of a lack of parts. The government has allocated up to $5 billion in its Auto Supplier Support Program to help ensure that suppliers can continue to make needed components regardless of the state of the car company it has been supplying.