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Mortgage & Housing Market News from HSH.com
May 15th, 2009

Update1 GM & Chrysler Announce Massive Closings

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The downsizing is currently underway at GM and Chrysler dealerships across the country. Chrysler announced the closure of 789 dealerships yesterday, and according to Automotive News, GM announced the closure of 1,124 dealerships today.

The Wall Street Journal expects 89,000 workers to be affected, but not necessarily laid off, as certain dealerships will continue to sell used vehicles. GM could shut down another 1,600 dealerships as the automaker phases out their Pontiac, Hummer, Saturn, and Saab brands.

Battling anemic sales, GM and Chrysler have too much inventory to turn a profit. The domestic automakers have taken far too long to take a page out of the foreign automakers’ book — which have far fewer dealerships yet sell far more merchandise:

By some measures, Chrysler may still have too many dealerships even after the cuts. Toyota has some 1,200 U.S. stores — about half the number Chrysler will have. Yet Toyota is on pace to sell about 60% more vehicles in the U.S. than Chrysler in 2009.

Unemployment To Rise

One Chrysler dealer in Tenafly, NJ had to notify 50 employees that their dealership would be closing. If the 1,913 dealerships that announced their closings today have at least half that number of employees, that’s 47,825 unemployed Americans right off the bat.

Analysts say the nationwide closings will make it impossible for upcoming jobless claims to improve. Despite last month’s “easing” in unemployment, recent announcements from both the auto industry and companies like Nike are likely to force the unemployment rate even higher.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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