DETROIT — In a speech to the Automotive Press Association Tuesday, National Automobile Dealers Association (NADA) Chairman Annette Sykora urged the federal government to act quickly to disperse funds from the $700 billion financial bailout, noting that closures across the U.S. prove that dealers are in dire straits.
"We’re likely to lose up to 700 dealerships this year," Sykora said. "Some of these stem from the challenges faced by the Detroit Three. Before the financial crisis set in, some profitable dealers closed because the value of their land was so high. But many other closings are being driven by the real-estate meltdown."
In her address, Sykora emphasized that the credit crisis affects both customers and dealers. In an industry in which 94 percent of buyers finance their purchase, even prime borrowers are finding it difficult to obtain financing. For dealers, the combination of fewer sales and increased floorplanning costs is proving deadly.
“Credit is the lifeblood of our industry,” Sykora added. “Dealerships need it to finance inventory from the manufacturers. Consumers need it to buy cars.”