Car dealers gear up for hard times
Posted November 12, 2008 10:42 p.m. EST
Updated November 13, 2008 9:06 a.m. EST
Cary, N.C. — The topsy-turvy economy has some federal lawmakers calling for a government bailout of the nation's Big Three automakers. Auto dealerships in the Triangle aren't immune to the tough times, and they are struggling to keep cars moving off the lot.
While the region hasn't seen massive car dealership closings like other parts of the United States, Triangle dealerships are offering incentives and cutting costs to attract customers.
“The last couple of months have been very challenging,” said Craig Madsen, with Madsen Motor Company.
Madsen runs a Cary car dealership with his brother. They specialize in European cars and have been in business for 17 years.
He said that in the past – on a good day – maybe 10 or 12 people would at least come into the dealership to browse. In the last two months, however, he says it has changed to about one or two people.
“There's been a 50 percent drop-off in business during a time of the year we expect to be busy,” Madsen said.
Dealerships rely on the fall months to generate revenue ahead of the usually lackluster winter months, Madsen said. But that is not the case this year as consumers watch their spending and a tight credit market makes it harder to get a loan.
“People need to have better credit scores, a better financial situation. The car dealers and other people selling big-ticket items, they're really behind the 8-ball here. They've got a lot going against them,” North Carolina State University economist Mike Walden said.
Walden said when it comes to big-ticket items like cars, people tend to put those purchases on hold during an uncertain economy. However, Madsen said he has seen a surprising uptick in traffic on the lot recently.
“We've got the eternal American optimism that things will turn around, that we're only a few days away from the next turn upward. We're hopeful that will be the case,” he said.
Madsen said his dealership will survive thanks to a regular clientele that keeps coming back. However, that may not be the case for other dealerships around the state. The North Carolina Automobile Dealers Association reports 19 dealerships have closed since July 2007.