• Wall Street Journal, Tuesday, January 27, 2009 10:30 AM

Auditing firm Grant Thornton LLP's Detroit office predicts that 3,800 the 20,000 dealerships in the U.S. would need to close to maintain sales per dealer at last year's level, Richard Gibson reports. General Motors alone expects to trim at least 1,700 dealers -- about 25% of its current level -- by 2012.

Marisa Bradley, a Ford spokeswoman, says the company has been voluntarily consolidating dealers in major metropolitan markets to improve their profitability, but adds that "we anticipate that current economic and market conditions will accelerate normal attrition levels" among its dealers.

Some dealers' attorneys are urging clients to review their franchise contracts to better understand what options they might have should their franchiser-manufacturer decide to drop a brand, merge with another company or go out of business. Franchising is primarily regulated by a patchwork of state laws, most of which contain language that protects franchisees from being terminated for other than good cause. But some are vague on what constitutes "good cause."

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