Of the 137 new-car dealerships that closed last year in California, 32 were in Los Angeles County, long considered the car capital of the nation. This year, it’s expected to get worse.

Already, 24 more dealers have closed statewide since the beginning of January, including two in the county. And that was before the Legislature nearly doubled the car taxes last month to help close California’s budget deficit, adding nearly $400 to the cost of an average-priced new car.

“This is a serious problem for everyone,” said Peter Welch, president of the California New Car Dealers Association, which collected the closure data. “The ripple effect extends beyond just a dealer losing their business, so it’s really devastating all around.”

Indeed, the ripple effects include the 2,100 and perhaps as many as 3,600 dealership employees countywide who have lost their jobs. Also, cities have watched tax bases decrease.

In a way, the carnage is not unexpected amid a steep decline in car sales that has threatened the Big Three domestic automakers with bankruptcy and prompted two of them, GM and Chrysler, to seek nearly $40 billion in federal bailout funds.

Los Angeles County is the largest single market for auto sales in the United States, with new car and light truck sale registrations approaching 650,000 annually. But new car sales fell by 23 percent last year in California, worse than the national drop of 18 percent.

Local dealers said that business is down between 25 percent to 45 percent so far this year, compared with a mediocre 2008, as the conditions that have slowed sales worsen, aside from the car tax hike.

The credit crunch, which has crimped the ability of car buyers to get loans, has now hurt the ability of dealers to obtain inventory. And consumer confidence has only worsened as the county unemployment rate hit 9.9 percent in December, the highest in 14 years.

The state’s New Car Dealers Association now predicts California could end up losing almost one-third of dealerships this year – 500 of the remaining 1,500.

“It’s the perfect storm for a dealer’s worst nightmare,” said Mike Gilligan, general manager and co-owner of Cerritos Ford, one of the county’s biggest Ford dealerships. “It just seems like we’ve been slammed on every side.”

Dramatic decline

Although car sales slightly decreased over the past five years, it wasn’t until last summer – when gasoline prices nearly hit $5 a gallon locally – that car dealers started to shrink dramatically, said Aaron Jacoby, an attorney with the Venable law firm, which represents many Southern California automobile dealers.