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Slow sales plague car industry
As the national economy struggles, the automobile industry appears to be among the hardest hit sectors. Reports issued last week reveal the depth of the problem as sales at the country ’s top automakers fell sharply in September.
Local car dealerships are also feeling the sting from the double punch of the current credit freeze and sagging consumer confidence. High fuel costs aren ’t helping much, either.
According to sales tracker Autodata, overall industry sales dropped 27 percent for the month to 964,873, falling below the one million mark for the first time in more than 15 years.
The decline in sales was industry-wide, with Toyota down 32 percent, Ford off by 35 percent, Chrysler down by 33 percent from last September. Nissan was down 37 percent, while Honda was off by 24 percent and General Motors was down 16 percent from the previous year.
Those trends are certainly reflected in sales at local dealerships, three spokesmen said this week.
Acknowledging that sales are off, John Konoza, vice president and general manager at Rick Hunt Ford in Warrenton, pointed out that the automobile industry isn’t the only one suffering.
The slowdown is “happening everywhere. It’s across the board,” said Konoza. “It affects any business that deals in items people need to finance.”
Lenders have become more cautious about making loans, while consumers have become more concerned about spending money, Konoza said, noting that the result is slowing sales.
Konoza points to the fact that the dealership, which has been in business since 1973, has historically worked with several different lenders, offering indirect financing to its customers. That allowed customers to shop for a car and secure financing at the dealership through a bank or other lender.
Now, Konoza said, many banks have stopped that practice, and others have made it tougher to secure a loan.
“You can see it. It’s harder to get a loan than it was six months ago and six months ago it was harder than it was 12 months ago. Banks are not looking at things as they did in the past. And a lot of them don’t have money to lend,” Konoza said, noting that customers with good credit scores and history are still receiving attractive loan offers.
“Very few people are looking to buy because they’re unsure what’s going to happen,” he said.
Jim Harris, owner of Jim Harris Buick, had a different outlook.
“The news media keeps saying that you can't get a car loan. There's absolutely no difference now than it was before,” Harris said. “With good credit, you can get a loan.”
Ken Shepherd, managing partner of Warrenton Toyota, said that the dealership is not having trouble making loans to customers with strong credit through its in-house Toyota Financial Services.
“By and large, Fauquier County has a great group of responsible people, most of whom don't have problems borrowing money,” Shepherd said.
They all three agree that business is off.
“Our business has been pinched, just like everybody else's business,” said Shepherd, noting that the dealership opened May 30, “We just opened. And the good news for us is that we started small. We opened the business with a very, very minimal staff. The current economic climate was not a surprise to use. We opened with minimal expenses and looking back it's really a blessing.”
Harris is also counting his blessings.
“Business has been a little bit off, but we're small enough that we can roll with the punches a little,” Harris said, noting that he expects to avoid making any layoffs because of the downturn.
In business 18 years, Harris said that the car market saw a similar, though perhaps not as significant, downturn in the late 80s and early 90s. That's when he purchased the dealership.
“It was a good time to buy, but since then, it's been a great business. Now, it's slowed down again. It's a cyclical thing. There are always ups and downs,” he said.
On a positive note, the dealerships are seeing increased business in their repair and body shops and parts departments.
“Since people aren’t buying, they’re repairing and maintaining their cars to keep them on the road longer. If you’re going to drive your car longer, you have to put new shocks on it, or new tires, to keep it going.” Konoza said. “You see those areas come up when sales slow down. When sales are brisk and someone has a $600 or $700 repair bill, they might decide to trade it in. Now, they’re having the work done.”
Shepherd said that the Toyota service department is also faring well, attributing it partially to customers keeping their cars longer. Another factor for the dealership, he said, is convenience, noting that previously Toyota owners had to have repairs done in Northern Virginia and now take advantage of the closer dealership.
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