Combined volume of new- and used-car sales in 2008 dipped below the 50-million mark for the first time since the early 1990s, according to CNW Market Research.
The decline in new- and used-vehicle sales was caused by deterioration in credit markets, collapsed home equity and tougher lending standards for auto loans, said the Bandon, Ore.-based research firm.
Total vehicle sales reached 49.8-million in 2008, down from 57.8-million units in 2007. New-car sales reached 16.2-million units in 2007 and dropped to 13.3-million units in 2008. Used-car sales were 41.5-million units in 2007 and fell to 36.5-million units in 2008.
The drop was significant for franchised dealers, who usually rely on used-car sales when new-car sales decline, and vice versa. For independent dealers, the downward plunge in sales caused many dealerships to close.
"There were 42,791 independent lots in 2007, but that number dropped 9.7 percent to 38,662 in 2008," wrote Spinella in his January report.
These closures did not help the industry maintain per-store sales volume, which fell from 302 sales per outlet to 283 sales per outlet. With the sales decline, independent dealers struggled to maintain profits because they could not find lending sources for their near-prime and subprime customers. Independents also do not have service or parts departments, which are typical revenue-generating sources.
"However, 2009 could be a turnaround for the used-car market with the increase in vehicles and easier credit approvals," wrote CNW's Art Spinella. "If independents maintain their 32 percent share of total sales, it translates into 12.8 million vehicles sold, which is one million more than 2008."