In recent weeks we’ve discussed the impact of the faltering economy on U.S. automakers and parts suppliers, now there are new estimates of the potentially devastating impact on car dealerships. Auditing firm Grant Thornton’s Detroit office predicts that 3,800 of the nation’s 20,000 dealerships would need to close to maintain sales per dealer at last year’s level. GM has said it expects to pare at least 1,700, or about a fourth, of its dealers by 2012. Meanwhile, parts suppliers are ramping up a major lobbying effort to get relief from the stimulus package or from financial rescue programs.

In other news:

Green car rules give auto industry a new challenge - President Barack Obama wants automakers to make greener cars at a time when General Motors and Chrysler are hanging by the thread of a massive government loan and auto sales have plummeted to their lowest levels in more than two decades.  Obama's plans could bring smaller cars, more hybrids and advanced fuel-saving technologies to showrooms, but car shoppers will probably pay more upfront because the new rules are expected to cost the hamstrung industry billions of dollars...Obama on Monday directed the Environmental Protection Agency to review whether California and more than a dozen states should be allowed to impose tougher auto emission standards on carmakers to fight greenhouse gas emissions. The Bush administration had blocked the efforts by the states, which account for about half of the nation's auto sales.

The best quote in the article is from Roland Hwang, a senior policy analyst with the Natural Resources Defense Council:

"Without California standards and without federal standards, there's a real danger of Detroit falling back in their old gas-guzzling ways,"

Of course by "Detroit", Hwang means "All car buyers" since you don't see many news stories about people being forced to purchase a specific vehicle at gun-point.  Here is our take on the matter:

California should not set national standards for environmental regulation. The President already has the authority to regulate greenhouse gas emissions from motor vehicles under the Energy Independence and Security Act of 2007.  Allowing the California waiver would create a patchwork of regulations, be inefficient, and not achieve the desired outcome.  As Congress tries to bail out the auto industry, California wants to punch more holes in the bottom of the boat.