Dealers struggle to sell big cars; hybrids, gas-savers in demand

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In an effort to sell trucks and SUVs in a big-vehicle market that’s been depressed by high gasoline prices, Northway Toyota general manager Greg Finin said his dealership has deployed more “direct advertising” to consumers than ever before.

“We’ll pop into a Lowe’s or a Home Depot and just leave some fliers on some pickup trucks in the morning because those are the gentlemen that are a lot more inclined to purchase the large pickup,” Finin said. “We’ve never done that type of marketing before, but I think that’s going to be the wave of the future — trying to market to directly who you want.”

Automakers have seen their sales tumble this year as weak consumer confidence, declining house values and high gas prices have steered many buyers away from dealer lots and pushed the ones who remain toward smaller, more fuel-efficient vehicles. Analysts have predicted a seasonally adjusted annual sales rate for August of just over 13 million, far below the August 2007 rate of 16.2 million.

U.S. auto sales in July fell to an annual rate of 12.5 million vehicles, the lowest in 16 years. Most major automakers posted double-digit declines.

The Federal Reserve reported Monday that consumer borrowing for car loans grew only 0.5 percent in July, down from a 6.1 percent surge in this category in June.

Finin said the year-over-year sales for his dealership will probably be off slightly from last year, led by declines in sales of trucks like Toyota’s Tundra and Sequoia models.

Toyota Motor Corp. reported earlier this month that its truck sales were down 17.6 percent.

To mitigate the sales decline trend, Northway Toyota has deployed other guerilla marketing tactics, including leaving brochures at Valley Cat games and other events where men who work with the trucks are likely to be.

“Obviously, the vehicles that do not obtain great gas mileage have suffered in sales and it takes a lot more focus and concentration to move those vehicles to the right people,” Finin said. “We’ve lost more of the ‘weekend warrior’ type pickup truck owner, so we’ve switched to more of a Lowe’s/Home Depot construction gentleman, who’s using it strictly for work, who has to have a pickup.”

Car dealers throughout the Capital Region are hoping to avoid the fate of Metro Dodge, which closed Sept. 3, and Wedekind Pontiac, which quit selling new cars in July.

Capital Region car market

Deborah Dorman, president of the Albany-based Eastern New York Coalition of Automotive Retailers, said the Capital Region’s car market is strong and stable compared to many areas in New York state because it has so many state employees and workers in the health care industry. She said those sectors, traditionally considered “recession proof,” maintain the customer bases for many local dealers even during an economic down turn.

“I would say we’ve fared better than the western part of the state. Statewide over the last year and a half there have been about 80 dealerships that have closed,” Dorman said. “Some of them may have closed for various other reasons besides the economy. There’s a certain pressure within certain line makes to make sure there aren’t as many dealers representing the same product.”

Dave Dariano, an executive with Metro Ford Sales Inc., the company that operated Metro Dodge, said it was a dropoff in sales of trucks and SUVs that led to the closing of his stand-alone Dodge dealership on Central Avenue in Colonie.

“Dodge stand-alone is a very tough franchise right now,” he said. “Chrysler, they build good automobiles, they just . . . weren’t ready for this. The Dodge line doesn’t have a bunch of fuel-efficient passenger cars.”

Rik Woldring, the general manager for Langan Motor Cars located in Colonie, said the overall sales for the group of dealerships he manages should be up from last year. He attributes this in part to the variety of manufactures and brands in the group, including Porsche, Audi, Volkswagen, Chrysler and Jeep. He said his Chrysler and Jeep brands are selling about 7 percent ahead of last year, bucking the national trends. He said stand-alone dealerships don’t have the flexibility Langan Motor Cars has and can’t feed off the traffic generated by diverse customers.

“I don’t have all of my eggs in one basket,” he said. “If I’m going to run five different franchises, they’re all going to lean on each other a bit and benefit from each other’s existence.”

Dorman said it remains to be seen if other stand-alone franchises in the Capital Region stuck with lines without many fuel-efficient vehicles will be forced under because of high gasoline prices.

“We’ve been pretty sheltered, we’ve only just had our first round of closings. Some of the dealers may decide their real estate is very valuable or they don’t have any kids going into the business and decide to make a deal [to close] with the manufacturer,” she said. “I think we’re going to see some volatility in this market, not as many closings, but perhaps a lot of [dealerships] changing hands. I’m anticipating a bit of a wild ride over the next six months or so.”

Small car sales

The flip side of the declining sales of the once money-making trucks and SUVs is the red-hot market for hybrid and fuel-efficient vehicles.

“You almost don’t need to ask customers what they’re here to look at, you can start the conversation with ‘we have a waiting list for the Prius, a waiting list for the Yaris and if you’d like to take a look at a Corolla or Camry, we’d be glad to show you one,’ ” Finin said.

Toyota Motor Corp. said sales of the Yaris were up more than 20 percent in August, while the Camry midsize sedan saw sales grow by 3.3 percent, increases that helped keep the manufacturer’s overall car sales decline to only 3.4 percent.

Finin said its waiting list for the Prius hybrid tends to be four to 12 weeks, depending on a customer’s preference for color.

Ford was another manufacturer that saw some benefit from sales of smaller vehicles in August. Sales of its Focus were up 23 percent year-over-year amid an overall sales decline of 26.5 percent.

Dariano said Metro Ford is in considerably better shape than Metro Dodge was because Ford has a more diverse fleet of vehicles than Dodge.

“The Ford store is doing OK, obviously we’re not where we were a few years ago but nobody is. Our business has shifted, obviously, from trucks to cars, but that’s OK — at least we’re selling something,” he said.

Sales Incentives

In an attempt to increase sales, General Motors Corp. has begun offering all buyers employee pricing on many models until Sept. 30. GM reported a 20.3 percent drop in sales for August from a year ago but a 31 percent improvement over its July totals. Employee discounts generally are 10 percent below the invoice price but vary by model.

DeNooyer Chevrolet General Manager Tom DeNooyer said the pricing incentive has worked so far in the Capital Region

“August was the best we’ve had in a long time. It was just phenomenal,” DeNooyer said. “The GM employee pricing is just an excellent deal for the customer. It really is a deal and when things are a deal it works.”

Dorman said the GM pricing program may be boosting sales now but could hurt new cars sales next year.

“Last time the manufacturers [offered discounts like this], it ended up hurting them in the long run, so I’m not sure how good a strategy it is,” she said. “Instead of spreading out sales over a certain period of time, you take a lot of sales in say one or two months and then you don’t see much business for the next six.”