Area Car Dealers See Year-End Upturn
by Bill Lopez
CLEARWATER -- Like the rest of the US, auto sales in the Clearwater area are in the tank for all of 2008. Dealers are doing all they can to deal with the overall declines for the year of between 30 to 40 percent. They are trying to retain staff and are adjusting prices on new and used car in an effort to get sales up. Bob Smith with Fitzgerald's Chrysler said he has combined jobs and asked staff to multitask to accommodate reduced volumes. He sees a rocky first half and looks to an upturn in the spring with all the pent up demand we have in the car market.
Most dealers have reduced their inventories in some cases up to one-half of what showroom inventories have been in the past. Nevertheless, as the year comes to an end, many dealers are experiencing an upswing in sales. For the past two weeks, some dealers are seeing a surge in sales with factory and other incentives piled on that bring new car prices down from $2,000 to $4,000 versus year-ago levels.
Financing has been the largest barrier to sales. Marc Cannon with Autoway Chevrolet said customers with good credit have been locked out of the market because banks are not lending. He mentioned that one potential buyer he knew of with a credit score just below 700 would not apply for a loan for fear of being rejected.
Cannon said the bank bailout has many dealers scratching their heads. Banks were to use government funds to make loans but that has not happened. He said the bail out has done next to nothing over the past two months to help stimulate the economy.
Now however, loan money is beginning ease up and GMAC is rumored to be offering a zero percent auto loan with a substantial down payment. Exact details of the new low package are expected to be released soon.
One dealer bucking the trend is Saturn of Clearwater. Sales Manager Bob Constantinou said customers are definitely in a different mindset from what he has seen the past. They insist on value and look for the best deals on the cars and financing packages. Cars can easily be financed for under 5% for credit worthy buyers, he said. That has worked to Saturn's advantage. He reports very strong sales and in fact says he needs more sales staff to properly cover the floor during busy weekends.
While the value market is apparently fairing very well, upscale cars are also in a somewhat better situation than the mid-priced market. Ken Lohr with Dimmitt Cadillac said that his customers are not as challenged with financing but have held back on leasing programs since the banks have cut back on auto leases. "When a customer has to change from a lease to a purchase, he often finds monthly costs to be substantially higher. This has put many former lease customers into the pre-owned market. In fact our pre-owned inventory is very low," he said. "The incentives on new cars are the best they have been in years. It is very possible to get reductions in the $10,000 range on the purchase of $60,000 vehicle," he said.
Dealers said there is an obvious long-term problem with taxes being reduced to an all time low while government-spending moves to an all time high. Marc Cannon said that with gas prices down to their lowest level in years now would be time to put a tax on gas that would finance all the bailouts. "If deficits get too far out of line, we could jeopardize the validity of our currency," he said.
Looking ahead to 2009, dealers pin their hopes on the government stimulus package. If it is strong, the industry could see a recovery during the second half of the year. Cannon suggested the bail out contain things like tax write offs for auto loan interest and other incentives that would support sales.
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