Some vehicle dealers are beginning to see a tiny light at the end of a long tunnel — and it’s not a train coming.
“We are up, not tremendously, but it seems like every month we are doing a little bit better,” said Terry Tiller, CEO and general manager of Riverside Ford Lincoln on Riverside Drive in Macon. “It’s like a snail, but it is improving and that’s very encouraging for us because it’s been a tough road for a long time.”
Sales so far this year at Riverside Ford Lincoln are about 7 percent higher than last year, Tiller said.
“It’s looking a little better than last month,” he said. “It’s a long ways from where it used to be, but it’s getting better.”
Riverside Ford has nearly 100 employees, Tiller said. At its high point before 2007, it had about 160 employees.
“We’ve done a lot of adjusting over the last two years,” he said. “Mostly through attrition, we’ve shrunken our employee numbers here. … We’ve cut expenses everywhere we could. We’ve combined a lot of duplication of services like most companies have done.”
The auto business is rebuilding from a historic downturn during which both General Motors Co. and Chrysler Group underwent government bailouts and bankruptcy restructurings while they and other manufacturers suffered from plunging sales.
Some dealers were caught in the freefall.
GM and Chrysler closed hundreds of dealerships as part of their bankruptcy reorganizations. Franchises selling other auto brands also closed. Since 2008, the number of U.S. auto dealers has plunged 15 percent to 17,680, according to the National Automobile Dealers Association.
Auto dealership employment dropped 15 percent to 892,100 during the same period.
Now, rising car sales are helping the surviving dealers recover.
This month, new-vehicle retail sales have shown unexpected strength ahead of expected inventory shortages. The selling pace is expected to be slower during the second half of the month, according to J.D. Power and Associates, which gathers real-time transaction data from more than 8,900 retail franchisees throughout the United States. Inventories are expected to be down because many parts companies and vehicle manufacturers are affected by the devastating tsunami last month in Japan.
The increase in April sales would typically lead J.D. Power to revise its forecast upward for 2011, but it has not done that because of the high level of inventory uncertainty, according to a news release.
Edmunds.com, a premier online resource for automotive information, projects a slowdown in the latter part of April.
“This quickened sales pace will likely settle, as it seems there has been a rush of consumers anticipating a shortage, and most of those sales are likely behind us,” Ray Zhou, senior analyst at Edmunds.com, said in the release. “Inventories will soon get leaner, too, as production stoppages in Japan won’t allow dealers to restock as quickly, and that may cause some consumers to delay their purchases.”
Edmunds.com still projects 12.9 million new car sales in 2011, based on the belief that any supply constraints will only push summer sales to later in the year when automaker production is expected to return to normal.
The situation in Japan so far is only causing a paint pigment problem at Riverside Ford, Tiller said.
“We can’t get Tuxedo black (one of their most popular colors) and several shades of red,” he said. “If that’s as bad as it is, that’s going to be wonderful.”
Changing their looks
Nationwide, some dealers are sprucing up their showrooms and remodeling their dealerships.
The Jackson Automotive Mercedes Volvo Subaru dealership on Riverside Drive in Macon across from The Shoppes at River Crossing, is doing just that to its 11-year-old building.
“We are adding on and renovating the whole building,” said general manager Ken Grinstead.
“We are expanding our showroom. We also added an addition to the parts department, added some new wash bay areas and added some new shop bays.”
The total project will add about 3,500-4,000 square feet to the dealership, Grinstead said. The renovation is part of the factory program with Mercedes Benz, which wanted them to update the facility.
“They want to have a standard dealer-look throughout the country, he said. “It’s all about image and a modern look.”
Macon-based general contractor Chris R. Sheridan & Co. is doing the work.
Grinstead said the company has maintained about the same number of employees, which stands at just more than 50.
Sales have been mostly steady, he said.
“January started off a little slow, February was a little better and March was really good,” he said. “April so far has been a little soft, but that’s not unusual with tax month. That’s what we blame it on, anyway.”
The Five Star Chevrolet Cadillac Buick GMC dealer in Warner Robins is doing a major renovation, according to Chuck Stroud, owner and president of general contractor Stroud and Co.
The pickup in sales volume is spread across fewer franchises, because some dealers were pushed out of business because of the economy or by the manufacturers, according to Edmunds.com.
Gas prices affect vehicle sales
Both Tiller with Riverside Ford and Grinstead with Jackson Automotive said customers are looking for cars with good gas mileage.
“The miles per gallon have all of a sudden become a big topic again,” Grinstead said. “That ebbs and flows with the price of gas.”
Most of the cars on his lot get 20 miles to a gallon “and some a lot better than that,” he said.
Tiller said fuel economy is “probably in the forefront of most people’s wants and needs right now. Our car sales have really escalated for cars that get good mileage.”
On a recent Saturday, the dealer sold five Ford Fusions, which the Environmental Protection Agency estimates gets 23 mpg in the city and 33 mpg on the highway.
“A year ago, (sales of five Fusions) was probably a month’s worth of sales of that model,” Tiller said. “I think it’s going to be a good year for us. I hope this continues — this steady small climb — but at least its going in the right direction.”
Grinstead also was somewhat optimistic.
“I would say over all there is going to be a little upward tick but nothing dramatic,” he said. “Of course the price of oil can affect that real quick. Oil prices, of course, are going to have a huge impact on everything. If it continues to climb, it may stagnate everything.”
Read more: http://www.macon.com/2011/04/24/1536216/economy-drives-slight-increase.html#ixzz1LHjJPPCz
