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Car sales sputter in slumping economy

November 30, 2008|By ARNOLD S. PLATOU

TRI-STATE -- When Trin Garcia and his brother, Nick, bought major shares of a longtime car dealership in Greencastle, Pa., in 2007, things were looking pretty good.

Now, just a year and a half later, car sales nationwide are at the lowest point in more than two decades, and at Hicks Chevrolet Buick Volvo, sales are down 20 percent to 25 percent from a year ago.

Are the Garcia brothers second-guessing their timing?

"There couldn't be a better way to put that," Trin Garcia replied grimly. "But they say if you get through this, you can survive anything."

Survival.

That's becoming a key word in the auto industry.

But there seems to be no shortage of hope.

For one thing, not all dealers are hurting the same. For another, all are buoyed by federal action this past week designed to ease car loan financing.

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And all say prices and interest rates are so low, this is a great time to buy -- if only consumer confidence would return.

Plenty of bad news

Looking at the statistics, there is plenty of bad news.

In Washington and Frederick counties, sales have fallen 17.6 percent to 12,502 new cars and trucks sold from January through October, compared to the 15,188 sold in the same period a year ago, according to data from Cross-Sell, which tracks sales in several states.

Last month alone, total sales of new vehicles in the two counties plummeted 35 percent to 1,119 vehicles, Cross-Sell reports show. The reports monitor sales at 25 dealerships there.

The results are similar in West Virginia's Eastern Panhandle.

In Berkeley and Jefferson counties, the number of new vehicles sold skidded 16.6 percent to 4,481 from January through October, compared to 5,378 in the year-ago period, Cross-Sell reports show. It tracks eight dealerships there.

In October alone, sales sunk nearly 37 percent to 360 from October 2007, according to the data.

Cross-Sell doesn't track sales in Pennsylvania.

'We fell off a cliff'

Data for Washington County alone is hard to come by.

The Cross-Sell reports didn't separate it out and, normally, neither does the Maryland Motor Vehicle Administration. At The Herald-Mail's request, it retrieved the latest figures.

The figures show that in October, Washington County dealers sold 377 new cars and 96 used cars. In September, they sold 345 new cars and 44 used cars. But no year-ago data is available.

Peter Kitzmiller, president of the Maryland Automobile Dealers Association, said new vehicle sales statewide are down 13.8 percent so far this year.

The numbers for last month alone "were the worst they have been in more than 25 years," he said. "We fell off a cliff."

The main reason is consumers' lack of confidence in the economy, Kitzmiller said. Another hurdle is the perception that financing is hard to get, "but it's nowhere near the problem people think it is," he said.

This past week, the U.S. Treasury Department announced a new program to increase the availability of auto loans.

According to the U.S. Small Business Administration, the new program would make loans to investors who buy asset-backed securities made up of small business loans guaranteed by SBA, auto loans, student loans or credit card loans. As a result, SBA said, "lenders will find it easier to sell the loans they make, and use the proceeds of those sales to make new loans."

In addition, the Maryland car dealers' group is optimistic about legislation announced this month by U.S. Sen. Barbara Mikulski, D-Md., Kitzmiller said. It would allow people who buy a new vehicle next year to deduct interest payments and state sales/excise taxes from their federal taxes, he said.

And Kitzmiller is "pretty confident" that approval of a federal bailout package for Detroit's troubled Big Three automakers -- General Motors, Ford and Chrysler -- is near.

Election, market losses play a role

At Hagerstown Honda and Kia, sales are off, but not nearly as much as the average throughout the nation, general manager Bill Barnes said.

"We're just down 5 percent for the year, and the industry is down close to 40" percent, Barnes said. Nationwide, sales hit about 17 million in 2006, 16.5 million in 2007 and this year, the forecasts keep falling -- now to 11 million or less, he said.

At his dealership, as elsewhere, sales slowed a lot in October.

"We had a tougher-than-average month," Barnes said. "We attribute that to the national election. Whenever there's a national election, regardless who the candidates are, I think it tends to make people feel more nervous."

And, he said, stock market losses have shaken Americans.

Like Kitzmiller, Barnes said car loans are readily available to most people.

"We can get the same people financed on a car that we could six months ago or two years ago," he said.

For consumers, the good news is that with sales so slow, car manufacturers "are really aggressively seeking out everyone's business," Barnes said. So price discounts are bigger, he said.

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