Detroit wants to thin the herd of dealers

GRAPEVINE, Texas -- Tom Durant knows tough times. The auto industry fell into shambles in 1992 just as he gambled on buying a near-dead Chevrolet dealership in downtown Fort Worth. He renamed it and moved it 20 miles to this fast-growing suburb.

"Things got better, and we built this business up. We'll find a way to survive this time, too," vows Durant, whose dealership, Classic Chevrolet, sold just over 4,500 cars and trucks last year to retain its title as the USA's biggest Chevy seller for the third consecutive year, despite a 13% drop in sales.

GM wants to shed 1,675 of its more than 6,000 dealers by the end of 2012. Some will disappear because there are too many bunched together in a particular city for all to stay in business at a time of declining sales. Others would close if GM cuts its brand lineup to concentrate on what the automaker says are "four core brands." Those are Chevrolet, Cadillac, Buick and GMC. GM is considering selling Hummer and Saab. GM North America President Troy Clarke said in an interview at the Detroit auto show last month that Pontiac would "become a boutique brand, like Corvette." He declined to explain. Asked about Saturn's future, he shrugged his shoulders.

Chrysler, by contrast, is pressuring its dealers to take more inventory, even though sales were down 55% in January alone and dealers — just like buyers — are having trouble borrowing money to buy cars. Dealers also are being asked to shoulder costs previously borne by Chrysler.

Auto sales last year were a paltry 13.2 million, the worst since 1992 and down 18% from 2007. This year, forecasts are 10 million to 10.5 million. The reality: Too many dealers; too few sales.

The industry will see a net loss of 900 new car dealers this year, the biggest thinning of the ranks in nearly three decades, predicts the National Automobile Dealers Association. That's on top of a net loss of 760 dealers last year.