Auto Sales Good, Bad

Tulsa’s auto retail environment — always a challenge — has gone through the wringer this year as potential car buyers sit on the sidelines. Yet, many Tulsa’s auto dealers remain upbeat and even testy at the idea that the market is going soft.
A recent report by consulting firm Grant Thornton said an estimated 3,800 auto dealers will go out of business in coming months across the U.S., up from a previous estimate of 2,700. One large dealership, Bill Heard Enterprises, once the No. 11 U.S. dealership and the country’s biggest Chevrolet dealer, filed for bankruptcy protection last month, closing 14 dealerships in Alabama, Florida, Georgia, Nevada, Tennessee and Texas. It also laid off most of its 3,200 employees.
Automakers logged dismal September sales amid the credit squeeze. Americans bought 964,873 vehicles last month, the first time in 15 years that monthly U.S. sales fell below 1 million, according to federal government figures. Several Tulsa dealers admitted that September was clearly a difficult month.
In October, General Motors, Ford and Toyota all reported double-digit declines in sales.
The Tulsa Business Journal, as part of research for the Auto Dealers List, called more than 30 dealerships in the market, asking about sales trends. The TBJ received about that many different answers. Most revealed that the year started out well, suffered with high fuel prices, and rebounded some the past few weeks.
Overall, Scott Lemon, a new car salesman at Riverside Nissan, summed it up best.
“We chose not to participate in any recession,” Lemon said. “That is not what we want to hear or talk about.”
Year-over-year sales increased at the dealership. New car sales topped 100 per month through the summer and even this fall, which by many accounts was dismal, the dealership sold about 85 new cars per month.
“We were pointing toward between 85 and 90 cars in October,” he said.
Many, though, admitted that the year has been volatile.
“It has been hard to put your arms around it,” said one Ford dealer, “Trying to understand what the market looks like next week is tough enough — let alone next month or next year.”
There has not been a trend.
“More up than down. It has been a wild year and not just for us,” he said, “Going into winter, we are trying to find ways to cut the budget to lose as little as possible.”
The Internet has changed the way people shop, said Chris Huntley, Internet sales manager at Chris Nikel.
The Internet has made it easier for consumers.
“Not that long ago, you had to go to the dealership,” he said.
One of the first places buyers go when shopping for a new vehicle is the Internet. A study by JD Power and Associates reported that, of the 62 percent of new-vehicle buyers who use the Internet while shopping for a car, a whopping 88 percent will visit automotive Web sites before the dealership for a test drive.
Another report said, during 2006, about 1 in 3 car purchases were Internet generated.
In the recent past, some believed the Internet threatened brick and mortar counterparts. But, following the dotcom meltdown, retail dealerships remain standing and the Internet serves as a tool that enhances, rather than erodes, the way offline dealers do business.
But, the last three months have impacted everybody.
In the high-end market, Brad White at Tulsa Jaguar has seen steady business.
“We have done pretty good. Our clients are used to driving a luxury sedan or sports car,” he said. “They will continue driving the luxury sedan, either leasing one or getting an out right purchase.”
The reason is, they are used to making those monthly payments.
“It is something they are used to, and it is tough to go back,” White said. “The payments are already built in.”
One executive commented that sales are the worst he’s seen since 1991.
“I think it is 20 percent off,” said Keith Wadley, general sales manager at Jim Norton Toyota.
Overall, consumer confidence took a hit.
It has been a crazy year — during the selling season, dealers had the gasoline issues to deal with as high prices pushed many to dump their gas-guzzling sport utility vehicles for gas-sipping hybrids and smaller vehicles.
Typically, dealers keep a 90-day supply of such vehicles on the lot. During May and June, some dealers reported selling that 90-day supply in 81 days.
“They wiped out our supplies in May,” said Wadley. “The gas prices changed and further confused the car-buying public.”
Sales at Classic Chevrolet set a record in the first quarter, said Bruce Abbott, new car sales manager. The trend continued until July when gasoline prices took off.
“Normally, trucks outsell cars 2-1, but then it reversed and it was 2-1 cars,” Abbott said.
The dealership sold 52 Cobalts in 60 days. Other top sellers were the Malibu and Impala, which get up to 32 miles per gallon. Another hot item was the Avio, which gets 34 mpg.
The economic hiccup even caught Toyota, which saw its U.S. sales take a hit for the first time in more than 25 years.
September sales fell a third and again in October they took a 23-percent dip.
Nationally the Japanese automaker had its troubles, but the Tulsa market remained unscathed, said Kenneth Spencer, new car sales manager for Jim Norton Toyota,
“Toyota has been blowing and going for 20 years,” he said.
Domestic cars feel the pinch first, he said.
“Toyota has done it right for so long, when Toyota says the economy is slowing down – when they feel it – then it has to be serious,” he said.

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