Automobile dealers, strapped by overloaded inventories, cash flow problems, soaring costs and what they claim is a bungled national energy program, are in the midst of an apparent major shakeout period.
Sitting on 90- to 120-day supplies of cars costing $10,000 to $20,000 a month in dealership interest rates, dealers see no end in sight to a compounding set of economic circumstances, according to a random national sample of dealers.
Now they say the long-lasting impact of multiple problems will result in fewer but larger dealerships, more dual and triple franchises, greater emphasis on parts and service and a general realignment of inventories, costs and management.
"There's going to be a carnage of auto dealerships," said Ed Mullane, a Ford Dealer in New Jersey. "I've been in the business 25 years, and this is the roughest I've seen it."
Predicting that 25 percent of dealers will go broke this year, Mullane said, "They're dropping like flies now. A lot won't be around this Christmas."
The trend to fewer dealerships and movement to suburbs where freeway access and real estate prices are more attractive has been occurring for several years.
For observers now say that replacement from normal attrition and closing of marginal dealerships will decrease because of new investors and doubtful veteran dealers.
Joe Barry, regional director for the National Automobile Dealers Association in the Northeast, predicts that by 1981, 10 to 30 percent of dealers will fall out of the market, largely in this part of the country where "overdealering" has created a glut in showrooms.
Already, Ford Motor Co. says 34 dealers have closed their doors since last year, and Chrysler Corp., despite 116 new dealers, has dropped 100 compared with 46 that were dropped last year.
"What's happening in the market place is a very threatening type of environment," said Nat Shulman, president of a Chevrolet dealership in Hingham, Mass.
Calling this one of the most significant periods in dealership history, he noted that past downturns were temporary lapses. However, the future, he said, will depend upon efficiently run businesses and energy-saving products.
"Inventory control and management of capital will be the most critical part of dealerships," said Shulman, and the impact will mean a complete turnaround of attitudes and products.
"Today, cars have increased 50 percent in cost over the past 10 years and money rates have doubled," Shulman said. "It's like a vice."
Starting in May when gas lines cropped up in California, buyers began avoiding showrooms and the problems accelerated at both Chrysler and Ford dealerships after Chrysler's current request for financial assistance.
Now, factory-offered incentives for dealers has helped pump up sales and ease cash flow problems creating a more favorable outlook for this year.
General Motors dealers particularly are in a strong position due to an adequate supply of small cars. Plus, grumbles Mullane, "there's so much fat on GM that they'll last longer than all of us."
While the current symptoms are similar to the 1973-75 downturn -- inventory stockpiling, gas lines, threat of imports, plummeting big-car sales and cautious consumers -- dealers say the mood this time is more somber.
"We won't turn around like we did before," said William Doengens, NADA president. "We're in an evolution."
Similarly Bill Synes, a Pasadena Cadillac dealer who is sitting with double his normal inventory supply, said, "After the embargo, the public went right back to buying. This time, its a more difficult period. We'll just have to adjust."
From auto sales of 11.4 million units in 1973, units fell to 8.6 million in 1976, climbing back to 11.7 million last year. The annual sales rate for July was down 5 percent, and observers believe the year might end about 10.8 million below General Motors Corp. Chairman Thomas Murphy's prediction of 11.5 million cars.
However, dealers agree that the problem is not a doom and gloom sales outlook but one of dealing with a changing business.
While consumers hold onto cars longer and look to small cars for gas savings, dealers say there will be more reliance on efficient service departments, stepped up consumer relations programs such as fuel efficient clinics and a reexamination of their own operations.
What's more, Richard Wagner, a Ford dealer in Sinclair, Conn., believes that more dealers will go into catalogue operations with deliveries based upon special orders rather than off-the-floor sales.
Further, fewer extras such as courtesy cars, picking up the tabs for small repairs and giveaways will be offered.
"A lot of dealers are in trouble and are concerned whether they can survive the next few years," he said.
Similarly, Doengens said, "The cost of doing business is out of line with this type of industry." Looking at his balance sheet compared with five years ago, he said that the number of units are 33 percent higher, value of units is up 14 percent and interest rates have risen 53 percent.
"We're the last independent merchants on Main Street," he said.
Bob Mallon, a Tacoma, Wash., Ford dealer, charged, "We can't deny the economic realities. But we can do well and come out of the energy problem if we quit this politicking."
Saying that government interference has increased significantly in recent years, he added, "There are a lot of people who wonder if this business is as much fun anymore."