Things returned to normal—bad—in September for local auto dealers.
That wasn’t surprising, given the end of “cash for clunkers” in August.
The next few months could be more telling as to whether the federal rebate program will have any lasting effect on sales, according to dealers.
“I’m looking forward to a good quarter,” said Al Parajeckas, general manager of Crevier BMW in Santa Ana. “What cash for clunkers did most was move the momentum forward. It created a nice little buzz.”
Dealers across the country saw their strongest sales in the past year in August, thanks to the program.
That’s expected to be the case locally, too, when the Costa Mesa-based Orange County Automobile Association releases OC August sales in a couple of weeks.
Some local dealers said they tripled their business under the program.
Crevier BMW sold 77 autos under the program, according to Parajeckas. Sixty-seven of them were Mini Coopers.
“It worked well not just for lower-priced vehicles, but also luxury vehicle sales,” he said.
Payment
Early problems with slow or difficult reimbursements are being resolved, according to dealers.
“Quite frankly, we had our fingers crossed as to whether we’d get paid in a timely manner,” Parajeckas said.
Crevier BMW was paid, he said.
David Wilson Automotive Group of Orange, which owns Toyota of Orange, Newport Lexus and others, sold 1,425 vehicles under the program through 13 dealerships.
As of last week, it had been paid on all but about 100 autos.
Some dealers brought on temporary workers to handle claims. One, Kia Depot in Santa Ana, said it paid $30,000 for temporary help.
There was a lot of paperwork, Parajeckas said, but it was worth it.
“If they did it again, I’d be all in,” he said.
Dealers now are feeling the effects of the program’s end.
Nationwide, September sales fell 23% from a year earlier to 745,997 autos. The drop wasn’t as bad as the 30% to 40% yearly declines dealers had been seeing each month before the clunkers program.
For all of 2009, dealers nationwide are projected to sell about 10 million vehicles, down from 17 million annually before the recession.
A lack of autos to sell in September didn’t help, according to John Sackrison, executive director of the Orange County Automobile Association. With a run on popular vehicles in July and August, dealer lots were depleted, he said.
“The cars that people wanted weren’t there,” Sackrison said.
Automakers and dealers are hoping to keep the buzz going with rebates and incentives of their own.
BMW AG dealers have a “greener day” sale, offering a $4,500 “eco-rebate” to buy any diesel BMW.
Chrysler Group LLC is offering 0% financing. Other automakers and dealers are offering cash back and special financing.
Then there’s the annual Orange County Auto Show, which runs Thursday through Sunday at the Anaheim Convention Center.
“The auto show is very good. It definitely spurs sales,” said Mark Parkinson, owner of Tustin Nissan and Tustin Buick Pontiac GMC Hummer and head of the Tustin Auto Center’s dealer association.
The show features new models, concept cars, exotics, classics and other vehicles.
Auto shows are one of the best ways to spur sales, according to Sackrison.
His group puts on the show with the Long Beach-based Southland Motor Car Dealer Association and Harrisburg, Pa.-based Motor Trend Auto Shows LLC.
The clunkers program’s biggest impact could be in realigning supply and demand, Sackrison said. The program helped thin the number of autos on lots, leading automakers to boost production.
“Now production and demand are aligned,” he said. “That’s important for the health of the industry.”
Surviving dealers have adjusted, according to Sackrison. They’ve adapted to the industry’s new level of business, he said.
“Dealers by nature are optimists. But they’re also realists,” Sackrison said.
Since the start of the year through July, local dealer sales were off 37% from a year earlier to 52,997 autos, according to the association.
“I don’t know too many businesses that can survive a 40% downturn in sales,” Sackrison said.
Some analysts project that within three years national auto sales could be back up to 15 million annually. Others say it could take up to five years.
Next year, industry watchers are forecasting a modest uptick to about 11 million vehicle sales.
The clunkers program put auto buying back in the minds of consumers, according to dealers.
“A year ago it was like the scene from ‘Jaws’—everybody running out of the water,” said Jon Gray, owner of Orange Coast Chrysler Jeep Dodge in Costa Mesa. “At least now they’re sticking their big toe back in. At least people are having the conversation.”
Gray said his dealership has been reimbursed for all of its clunkers deals. It sold 100 autos under the program.
“For us that’s huge,” he said.
Some automakers have held on to the momentum of the clunkers program.
Fountain Valley-based Hyundai Motor America and Kia Motors America Inc. of Irvine, both part of South Korea’s Hyundai Motor Co., posted continued sales gains in September.
Hyundai sales were up 27% to 31,511 autos. Kia was up 24% to 21,623.
Kia Depot in Santa Ana sold 328 autos under the clunker program and has been reimbursed in full, according to K.C. Heidler, executive vice president.
In September, Kia Depot sold 76 autos, what Heidler called a return to normal.
The program brought out bargain hunters, shoppers who wouldn’t have come in without a rebate, he said.
“Those were buyers who were going to sit on their vehicles until they absolutely died,” Heidler said.
He said he has mixed feelings about the program.
“Did our dealership make more money? Yes,” he said. “But I’m against government helping companies.”
Clunkers Critic
Parkinson of Tustin Nissan and Tustin Buick Pontiac GMC Hummer said he would have liked to have seen a slower rollout of the program.
“There are a lot of ways it could’ve been done better,” he said.
Many of those who bought under the program likely would have bought later in the year, Parkinson said.
“All it did was pull business forward,” he said.
His assessment: The program wasn’t worth the headache.
“It created quite a bit of problems for a lot of dealers,” Parkinson said. “It created massive chaos.”
He said his dealerships sold about 60 autos under the program, mostly Nissans.
Parkinson said he won’t get reimbursed for some of the clunker deals because of paperwork mistakes.
“It was unbelievably complicated,” he said.
