Detroit 3 auto dealers preparing for rough times

[CarDealerCheck]

When thousands of U.S. auto dealers gather in San Francisco this weekend, much of the talk will be about just getting through 2008.

The obstacles include a shaky economy, volatile stock market and tightening credit, setting up what economists are predicting could be the worst sales year in more than a decade.

With word Friday that Chrysler plans to thin its dealership ranks and the other two U.S.-based automakers looking to do the same, those left to sell another day may end up stronger - and car buyers may benefit as well.

"Fewer dealers means better prices for the customers," said Gerald Meyers, a former chairman of American Motors Corp. who now teaches leadership at the University of Michigan.

That's because dealers not making money aren't quick to offer discounts.
"If they're profitable, they won't lose the sale," Meyers said. "If they're not profitable, they might lose the sale on the margin."

Automakers this year also could again offer zero percent loans through their finance arms and other incentives to help spur sales. But 2008 may be toughest for dealers who sell cars and trucks made by the Detroit Three, all of which saw sales declines last year and all of which are in the midst of restructuring.

"It's going to be an interesting year," said Paul Gaudet Sr., owner of a six-dealer group in Tilton, N.H.

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