General Motors and Chrysler plan to announce the dealerships they’ll be closing by the end of this week. The announcement could affect some of Iowa’s more than 350 auto dealers.
There are more than 6,000 G.M. dealers nationwide and the federal government is ordering the auto giant to cut that nearly in half that by the end of next year.
John McEleney owns auto dealerships in Iowa City and Clinton and is chairman of the National Automobile Dealers Association. He says plans to drastically cut dealerships are premature. McEleney says, "I think into July, August we’ll start to see some improvement and I think by this time next year, we won’t be back to normal by any means, but I think we’ll start to see some decent improvement."
McEleney says Iowa might fare better than other states because he says the majority of cuts will happen in metropolitan areas. But he adds Iowa is likely to lose some dealerships and he says that could have a major impact on Iowans having to travel long distances to buy new cars.
He says there are more dealers than the current market can support, but he says dealerships have been closing at a rapid rate by natural market forces. McEleney says after World War Two there were almost 50-thousand dealers, and today with more population, there’s about 19,000.
McEleney says closing too many dealerships can create more problems. "When dealerships close, customers have less competition, there’s less conveniences. Iowa’s a great example of this. There’s a lot of smaller communities that if they lost their dealer, or even not so small, they might have to travel 30, 40, 50 miles rather than five or 10 or more," McEleney says.
He says the National Automobile Dealers Association is ramping up its efforts to lessen the blow to dealerships throughout the country. McEleney says his group is meeting with the presidential task force managing the auto crisis on Thursday and is lobbying congress to keep dealerships open.