Business Is Off, Auto Dealers Say
Auto sales in Moore County are down, as in the rest of the country, but local dealers seem cautiously optimistic that the industry will rebound.
The Pilot spoke with three dealers by phone this week about the current situation.
Tommy Phillips of Phillips Ford in Carthage said sales have been down for a while. He said the decline has been exacerbated by the recent banking crisis.
"Sales are off and they have been off for some time," he said. "They took another dip with the banking crisis."
Phillips said consumer confidence was shaken by the "frightening and somewhat misleading" information given about the crisis. He said it caused people to believe that no loans were available for anyone -- when in reality, dealers have had access to money for car loans without any problems.
"That was information that was misinterpreted, and the government may have painted the picture with too broad a brush," Phillips said.
Troy Clark of Clark Cadillac Chevrolet in Pinehurst said his sales are down to about half of what they normally would be, especially on the high-end products. He added that the used market is better than the new market, as one would expect.
"It's hard to invest 20, 30, or 40 thousand dollars right now," he said, adding that he thinks the industry should start to build itself back in a slow and steady fashion.
Clark put some of the blame on the media for contributing to the lack of consumer confidence.
"Everything you read is doom and gloom every day," he said.
Bill Smith of Bill Smith Ford Lincoln Mercury in Southern Pines agreed that "everybody is off" right now in terms of sales. He added that he has noticed a bit of a rebound since the presidential election, which may have restored some confidence in buyers. Because of the rebates and incentives available to consumers right now, Smith said, now's as good a time as any to purchase.
"If they're going to buy, now is a great time," he said. "It's definitely a buyer's market."
Smith said for the first time in a while, people coming to his dealership are actually wanting to buy a car as opposed to doing so out of need.
Smith said that sales of larger vehicles, like trucks and SUVs, are starting to rebound because of lower gas prices. The introduction of the new F150 truck, which is more fuel efficient and geared toward work application, has sparked interest from potential buyers. Ultimately, consumers are most interested in getting the best bang for their buck.
"We've seen that gas prices going down has helped the truck market," Smith said. "We believe that people are making a shift toward fuel efficiency."
He said Ford has been successful in selling smaller vehicles worldwide and the challenge shifts to bring those products to the U.S. and having them meet the country's emission standards.
Clark said that the new Cadillac CTS, which was named the 2008 Motor Trend Car of the Year, has generated a lot of interest. However, sales of larger vehicles like the Chevrolet Suburban and Tahoe have fallen off.
"[The SUV] market has certainly taken a big hit," he said. "It's hard to say anything is selling well right now."
Smith said sales of pre-owned vehicles are doing better than new ones. He added that as gas prices have come down, SUV sales have rebounded somewhat. While people have now become very aware of fuel economy, he said, they are still used to driving larger vehicles.
"I think the American people are still accustomed to full-sized cars," he said.
There has been considerable buzz across the country about the prospect that $25 billion from the $700 billion federal rescue bill might be used to bail out U.S. automakers. Ford Motor Company, General Motors, and Chrysler would be the beneficiaries of the measure. It is expected to meet strong opposition from Republican lawmakers.
The local dealers had mixed feelings on the bailout proposal.
Phillips said it would be "extremely difficult" for the three companies to survive without the government help, though he said little information has come forth yet. He called it a necessary step to save jobs locally and nationally, adding that the public may not realize that many local suppliers would be affected by the bankruptcy or liquidation of the automakers.
"I think all three of the American manufacturers need some help," he said. "If we were to lose a lot of jobs in the auto industry, it wouldn't just be jobs in Michigan, it would be for a lot of these [local] suppliers. This is one of those things that needs to happen to retain the manufacturing base in the automotive industry."
Clark called the bailout a "damned-if-you-do, damned-if-you-don't" situation. On one hand, he said we would hate to see future generations stuck footing the bill for today's mistakes. But on the other, he said letting any of those companies go belly up would have an enormous impact on the entire economy.
"Does it need to happen? Possibly," he said. "I think the ripple effect is going to be tremendous."
Smith said there's more to the problem than just the financial side of it. He called the challenge the American auto industry faces "an accumulation of baggage over 100 years."
"I really think there are some other things we should take a look at," he said. "They should look at restructuring a lot of things in the automobile industry."
Smith said U.S. manufacturers are forced to endure much bigger costs for labor, a result of unionization, than their international competitors who have plants in the country.
Despite the uncertainty of the market, the dealers have a positive outlook for the own businesses.
"As a business here, we're very stable," Clark said.
Nationally, he said it's natural to want everyone to succeed and not see a lot of people lose their jobs.
Smith was confident that the market would turn itself around. He said his offers of $12,995 or less on his pre-owned lots have been "very positive" for his customer base. He did say that the domestic manufacturers will have to find a way to save the truck market, which took a big hit when gas prices shot up.
Phillips said he is confident in the Ford brand, which he said prides itself on high-quality products. Contrary to the accusations that the American automakers are producing cars that nobody wants, he thinks they are indeed selling the right products. He said Ford has worked hard the past several years to get back on the right track.
He is also pleased that national attention has focused on the auto industry.
"I'm optimistic now that we are addressing these issues," he said.
Contact John Krahnert III at 693-2473 or by e-mail at firstname.lastname@example.org
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