The ground shifts under car dealers
The small-car stampede is on. The stampede would no doubt be bigger if dealers’ lots were better stocked with gas-friendly cars or if the would-be buyers could get a reasonable price on the gas-guzzlers they would like to unload.
In just the past week or so, prices on used SUVs and pickups have depreciated several thousand dollars in the Rochester, N.Y., metro area as gas prices hit $4 a gallon for regular.
Four-dollar gas is apparently a watershed point. The question now: When will it hit $5? And what car models are in the pipeline to deal with it all? Among such unknowns is an overriding certainty: Folks desperately want to hit the brakes on what they’re shelling out for gasoline.
In the trenches is your local car dealer, who needs to maintain business even as, in due time, the economics of car buying and selling sort themselves out.
One approach is to search for incentives to dampen the gas blow to motorists.
“We are running a $2.99 per gallon promotion,” said Justin Gersbach, sales manager at Canandaigua Chrysler Dodge Jeep. Chrysler’s Let’s Refuel America Program gives customers who buy new cars from the dealership rebates on all the money they spend on gas that exceeds $2.99 per gallon for the next three years. The program covers 12,000 miles of travel for each of the three years.
“The program has been very successful so far. It has significantly driven traffic into the dealership,” said Gersbach.
Once on the lot, customers can consider other enticements, such as 0 percent APR financing for 36 months on models like the Dodge Avenger, Chrysler Sebring, Jeep Grand Cherokee and many others.
Even at lots where the emphasis has always been on somewhat more fuel-efficient cars, the current tactic is to, in effect, offer to buy customers some of their gas if they’ll buy one of the cars.
“We offer large rebates at this time to make up the difference,” said Tom Foster, sales manager at Vision Hyundai of Canandaigua. Hyundai is currently offering at least a $500 rebate on all 2008 models, with the maximum being a $3,000 rebate on the Sonata.
Foster said that Vision Hyundai has been prospering.
“We have been kind of different. We had our best month ever in my 14 years here last month,” said Foster. According to Foster, a good part of Hyundai’s success can be attributed to good gas mileage on several models like the Accent, Elantra, and Sonata.
Vision Hyundai has sold close to 40 of the most basic Elantra models in the last month, leaving the dealership with zero on the lot. The most basic Elantra, the Elantra GLS, comes standard with power windows and locks, cruise control, air conditioning, and a CD player, said Foster.
Around Rochester, hybrid Honda Civics are wait-listed between 10 and 14 weeks. The waiting lists for super-efficient Prius and Smart cars are into 2009. Toyota's Yaris is wait-listing for the first time. Nissan's Versa is sold out. VW has stopped taking deposits on deisels and may offer people with deposits a one-year cheap lease on gasoline cars to help make them wait.
As gas shock sets in, the dealers sense a heightened seriousness about all matters economic among their customers, who are increasingly using the Internet as a research tool. As a result, said Foster, “consumers are more educated on every aspect of car shopping.”
Of course, even while the dealers might be in limbo as inventories clear and new models are awaited, they want to be part of the solution rather than the problem.
“We are spending a lot more time with consumers now because there are so many other factors coming into play,” said Randall Farnsworth, president of Randall Pontiac-Buick-GMC and Farnsworth Chevrolet-Cadillac in Canandaigua.
“Consumers are much more informed now. No one used to say, ‘I really need to set up a budget.’ Now, people are doing that. All of those factors are coming into play now, and that didn’t happen as much five or 10 years ago,” said Farnsworth.
“It takes longer to talk to a customer because they want to make sure they are going to fulfill their family’s needs,” Farnsworth said.
Tony Pfeffer, general manager of Becker Lincoln-Mercury, confirms that “people are definitely looking to buy smaller cars.” SUV sales are down, he said, and trucks sales were down at the dealerships selling them.
Said Farnsworth: “People who used to have a pickup truck as their second vehicle are not looking at that as a viable option.”
“In some cases, gas is more expensive than payments,” said Farnsworth.
Contact Alex Bauer at (585) 394-0770, Ext. 255, or at firstname.lastname@example.org.