Orange County auto dealers have had a rollicking good time with employee discount programs offered by Detroit.
The key word is had.
“When they first came out, we did really well,” said Jan Waters, sales manager for Connell Chevrolet in Costa Mesa.
Connell sold an extra 175 cars in both June and July, double what it usually does, Waters said.
“It did the job,” he said.
The 2005 models are nearly gone, according to Waters.
But now the hoopla has fizzled, even though the discounts still are on, he said.
Other dealers say the same thing. Auto buyers expected the program to end in early August, so they did all their buying before then, they said.
Some customers may not know that the big three automakers pushed the deals into September.
The programs let customers buy cars for the same price as an employee pays.
General Motors Corp. was first to come out with the discount in June. So dealers such as Connell saw the benefit for two months more than Ford and other dealers.
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Chevy HHR: “All the salesman are really excited about it,” Waters says |
In July, Ford and other automakers followed suit.
Dealers had a choice in whether they wanted to offer the discount, Waters said. It really wasn’t much of an option,dealers risked losing sales to another dealer down the street, he said.
Santa Margarita Ford in Rancho Santa Margarita was up 50% last month from the prior month but sales have slowed in August, sales manager Matthew Kusez said.
Customers liked that they didn’t have to negotiate, Kusez said. All the cars were marked with the discount, he said.
The programs helped dealers get rid of cars on the lot, which helps with costs. But the volume sales didn’t serve profits as well as some hoped.
“It’s a much smaller margin on everything,” said Frank Busal Jr., executive vice president of McPeek’s Dodge of Anaheim.
It’s not likely the programs will be extended beyond Labor Day, dealers said. Dodge dealers are set to get a 10-day countdown notice, Busal said. Future incentive programs are anyone’s guess, he said.
Not knowing about incentive programs ahead of time irks some dealers. Busal said he hears about promotions on the news first. Not knowing works against the dealers when they sell a regularly priced car that gets discounted the next day.
“The customers always think you knew,” he said.
Manufacturers don’t want to tell the dealers in advance because they don’t want dealers telling their customers to come back next week, according to Busal.
After Labor Day, it’s likely dealers will have to rely on the appeal of their 2006-07 models. What’s hot?
Chevrolet is counting on its new HHR, modeled after the 1940s Chevy Suburban. (It also looks a bit like Chrysler’s PT Cruiser.)
Connell has sold eight HHRs and has two left with another shipment on the way, Waters said.
“All the salesman are really excited about it,” he said.
McPeek’s got the Dodge Ram Mega Cab, a larger version of its pickup truck. The Neon has finished its run and is being replaced by a Nissan Murano-looking Caliber. Dodge also has a new Nitro midsize SUV coming out.
Ford’s got a F-350 Super Duty truck and the Escape Hybrid.
Predicting a Swell
Quiksilver Inc. has high hopes for its young men’s store opening at South Coast Plaza. The Huntington Beach-based surfwear maker expects it to do as well as its South Coast Roxy store for girls and young women, which does better than average.
Gregg Solomon, Quiksilver’s senior vice president told men’s trade publication DNR that it expects sales to be about $1,000 per square foot, higher than the $800 to $900 average at South Coast.
Specialty Chain Ranking
Anaheim’s Pacific Sunwear of California Inc. ranks No. 64 on National Retail Federation’s top 100 specialty retailers. It is the only OC-based retailer on the list. PacSun had $1.2 billion in sales for 2004, up 18.1% from the prior year.
Nearby competitor Hot Topic Inc., based in Industry, was No. 97 with $656 million in 2004 sales. Topping the list is Best Buy Co. with $27 billion in sales. Gap Inc. is No. 2 with $16.2 billion. Office supply chains Staples Inc., Office Depot Inc. and OfficeMax Inc. round out the top five.
It’s Just Around the Corner
Already retail experts are making predictions about the upcoming holiday season. Good but not as good as last year, according to Challenger, Gray & Christmas Inc., an outplacement company. Nationally, retailers are set to add workers this year but not as many as last year. The company also predicts that gas prices will help boost Internet sales, which were $23 billion in November and December of 2004.
