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As Dealers Dwindle, Car Prices Set to Balloon

Lack of competition expected to drive up GM, Chrysler's prices

By Rob Quinn, Newser Staff

Posted Jun 8, 2009 2:05 PM CDT

(Newser) – The shake-up of America's auto industry will mean fewer auto dealers but the streamlining won't be making the cars any cheaper, experts tell the Boston Globe. Chrysler and General Motors are likely to turn to the Japanese model of fewer brands and fewer dealers when they emerge from bankruptcy, and the lack of competition among dealers is expected to add as much as several thousand dollars to the price of a new car.

Chrysler plans to cut a quarter of its dealers starting today, while GM plans to reduce its number of dealers by 40% by the end of next year. Toyota is seen by many as a model for reorganization. The Japanese automaker's US dealership is a fifth of the size of GM's but sells three times as many vehicles per location, and the company firmly controls how they are sold.

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Liquidation signs fill the windshields of new cars in the showroom of the Timberline Dodge dealership in Portland, Ore. (AP Photo/Don Ryan)

Hummer vehicles line up in a parking lot of a car dealer in Pasadena, Calif. General Motors Corp. has told about 1100 U.S. dealers their franchises will be terminated late next year. (AP Photo/Hector Mata)

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The Chevrolet competition is going to be the Ford dealer, dealer, the Toyota dealer, the Honda dealer. Not another Chevrolet dealer.
- Paul Bertoli, co-owner of a Chevrolet dealership in Massachusetts

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As Dealers Dwindle, Car Prices Set to Balloon