Across the Curve

UBS on Impact of Chrysler Dealer Closings

Auto dealer closings. Over the next 30 to 60 days, Chrysler plans to cut 789 of its 3200 dealers; and, over a slightly longer period, GM plans to drop 2600 of its 6246 dealers (both according to the Wall Street Journal). The direct effects on employment if all these dealers close could be on the order of -160k, spread over several months. Of course, some of those cuts may already have been made, and some of the dealers may retool as service shops, used car dealers, or representatives of a different brand.

(According to NADA, the average dealership employed 54 people, as of 2007. Since 2007, the Bureau of Labor Statistics reports a 13.8% decline in employment at new car dealers, through February. Assuming 47 employees per dealer now, the Chrysler closures suggest a cut in payrolls of 37k over the next two months, and the GM closures suggest a cut of 121k over a slightly longer—yet undetermine