Auto dealerships next casualty of industry slump: analyst

As fewer cars are sold, fewer dealerships will stay in business, says an industry analyst.(Canadian Press)

The shrinking North American auto industry has an analyst predicting the closure of more auto dealerships.

Industry analyst Dennis DesRosiers says simple economics — fewer customers buying fewer cars — means the number of dealerships across Canada is bound to decline.

"A lot of people don't realize that one of the biggest generators of jobs in the automotive sector are the car dealers, and that's where some of the real employment hits could be," he said.

Around 115,000 Canadians work at dealerships — more than twice the number of people employed at auto assembly plants.

At the Brampton Auto Mall, Bob Attrell is carrying on a family tradition. His father was a Toyota dealer, and now he's a Hyundai dealer and president of the Toronto Automobile Dealers Association.

"The market share for the domestics have gone down in the GTA and the imports have gone up, and that's been a slow process over a period of time."

But during that time the number of domestic dealerships has not dropped to the same extent.

"There are potentially areas in the greater Toronto area where maybe they are 'overdealered,'" said Attrell, "but the same thing could apply to the import franchises too."

Although the manufacturers won't say there are too many dealers, Attrell will.

"I would say yes, because that just makes common sense. But I would say that's not just a phenomenon for the domestic manufacturers."

Manufacturers are typically obliged to pay compensation to dealers whose franchises are shut down by the head office.

For its part, General Motors says it is not planning to reduce its number of dealers in Canada.