About 1,000 General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC auto dealers went out of business last year, a loss deeper than anticipated amid a crippling decline in auto sales.

The rate of decline has been so swift and deep that GM and Chrysler have backed off once-aggressive efforts to strategically downsize their vast dealer networks, sized for a time when Detroit's Big Three commanded more than 75% of the U.S. market.

While many dealers consolidated stores or voluntarily bowed out of the auto business, many left under duress. "You can't explain how depressing it is to drive past an abandoned dealership every day, how it leaves you with an empty feeling," Annette Sykora, chairwoman of the National Automobile Dealer Association, said Saturday in a speech at the group's annual convention. "What is happening to the business I grew up in?"

The NADA in December predicted about 900 dealerships - including a small number of dealers for the foreign-based auto makers - would go out of business in 2008. But Detroit's auto makers alone lost more than that, company executives said this weekend. About 300 Ford dealers closed last year, while 401 GM dealers and 287 Chrysler dealers went out of business.

Consulting firm Grant Thornton estimates about 2,500 of the nation's 25,000 new-vehicle dealerships will close in 2009. However, 5,000 would need to close to have a healthy level for this year's anticipated auto sales, the firm said this week.

"Auto makers have had these plans to reduce dealers, but the cost of implementing those schemes is intensive," Paul Melville, a Grant Thornton expert on dealer restructuring, said. "Now, market conditions are forcing dealers to consolidate."

The strain is evident as thousands of dealers and their spouses convene for a scaled-down convention with fewer posh parties and more sessions coaching how to stay afloat in tough times. Adding to the pressure is uncertainty around plans by GM and Ford to eliminate or overhaul several brands, including Ford's Volvo lineup and GM's Hummer and Saab brands. GM also is in the midst of a strategic review of Saturn, whose fate could range from being shut down to getting sold to franchise owners.

"There's a lot of anxiety, a lot of worry," GM sales chief Mark LaNeve told reporters Saturday.

Eliminating dealers has been a key goal for Detroit's auto makers as they adjust to the reality of a smaller market share and contracting U.S. market. The auto companies believe profitable, healthy dealers attract customers and create a more appealing image. Yet domestic-brand retailers sell far fewer cars and trucks on average than rivals selling nameplates made by foreign-based auto makers.

In recent years, auto makers have facilitated downsizing of their networks either by helping negotiate consolidations or pitching in money to facilitate deals. It's a balancing act for the companies, which fear that losing the wrong dealers in the wrong markets could cost them valuable sales.

Chrysler Vice President Jim Press said Chrysler doesn't have a target for the number of dealers that should close, but that a "Darwinian" process is occurring that will cull the number naturally. Of the 287 Chrysler dealers to go out of business last year, 92 left as part of Chrysler's strategy to get its Chrysler, Dodge and Jeep brand dealers under the same roof. The remaining 195 left for economic and other reasons.

Press said the auto maker is being less aggressive for fear of losing market share.

"We want to consolidate, but not at the risk of losing market share," he told reporters on Saturday.

GM also is less active in its dealers' affairs, in part because the cash-strapped auto maker doesn't have resources to help dealers close or merge, GM's LaNeve said. The auto maker has said it plans to cull 750 of 6,450 stores from its dealer network as part of a viability plan presented to the government as part of a loan request. The reduction is not a condition of the deal.

"It costs money to consolidate," LaNeve said. "And we've slowed down the activity while we figure out our brand and nameplate situation."

Ford said the company's strategy is unchanged. Even more than closed dealerships, Ford worries that drastic cost-cutting at dealerships threatens the business, said Ken Czubay, Ford's vice president of U.S. sales and marketing. "We're dealing with dealer families that have been in business 100 years," he said.

Dealers, who will meet on Sunday with top auto maker executives, appealed to auto makers and lawmakers to stay out of the fray.

"When a manufacturer targets a specific number of dealers to cut, that disturbs me," Sykora, of the dealer association, said. "What's the right number of dealers? The question is irrelevant. (Dealers) have the answers."

-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com

(Kate Linebaugh contributed to this report.)

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