Local auto dealerships fight economic downturn

Raleigh, N.C. — If you can find a loan for a new car, you still might be able to get a good deal.

Automotive sales dropped to its lowest number in more than 15 years last month with U.S. automakers selling almost 965,000 vehicles. Overall, sales were down 27 percent compared with the same time last year.

With numbers like that, auto dealers are pulling out all the stops to get buyers on the lot.

"The trick is, if you're a dealer or any advertiser in the retail business, you want to be sure that you remain positive and keep your troops fired up," said Jeff Hayes, broadcast creative director for The King Partnership advertising agency in Raleigh.

As the national economy slows, marketing specialists, like Hayes, say some dealerships will step up their offers on the airwaves.

"The car dealerships that survive long-term are the ones who make sure that they're top of mind, even during an economic downturn," Hayes said. "Because when the downturn is over, they're the ones who are going to be on top and those are the ones that are going to have the success."

New research shows as many as 3,800 U.S. auto dealerships could fail this fall and into 2009 – nearly one in five – because of weak sales.

"We fight that trend by making sure we cater to the customer," said Joel Smith, retail operations manager at Hendrick Cary Auto Mall. "Making sure we're letting everybody know that now is a good time to purchase. Now we do have incentivized rates, we do have the rebates, we do have the inventory out there – the same we had a year ago."

Smith says sales at Hendrick are actually up a bit this year, primarily because the dealership is willing to sell at reduced prices to move inventory off the lot, not because of gimmicks.

"I don't think you have to give a scooter away for somebody to buy a car, but I do think they need to think: 'OK, interest rate makes sense. Financially, in the long run, it makes sense - and what I'm paying for the actual vehicle makes a lot of sense."

Auto dealers also say they have to monitor their own line of credit because many of the vehicles they are selling are financed. The longer they go unsold, the more burdensome they become to the bottom line.