Auto sales crash worsens

By John Eckberg

Decline could mean shrinking roster of dealerships

Car sales plummeted in 2008 compared to 2007, and some analysts think that the year to come will be even worse as consumers worry about unemployment and a real estate market in shambles.

When consumer confidence sinks, big-ticket buys such as news cars head south.

“We’re all wearing life jackets right now,” said Robert K. Riggsbee, president of Inside Media, a Newtown-based media research, planning and buying agency that works with dealer groups in Cincinnati, Columbus and elsewhere in the Midwest. “It was a brutal year for new-car and new-truck sales. Now, it’s survival of the fittest.”

End-of-the-year results from the U.S. auto industry Monday were bleak, as sales of General Motors Corp. and Ford Motor Co. fell by 23 percent and 21 percent, respectively, in 2008.

Ford sales dropped 32 percent in December compared in December 2007; GM fell 31 percent for same span.

“Buy American” apparently resonated in December, though. Toyota sales dropped 37 percent, and Honda sales fell 35 percent compared to December 2007; both are based in Japan.

Overall, the auto Web site Edmunds.com predicted that sales for all of 2008 will total just over 13 million, down 18 percent from 2007 and the lowest level since 1992.

The continued slide in auto sales might mean 20 to 30 dealerships in Greater Cincinnati and Northern Kentucky are likely to close their doors permanently, said auto analyst Todd Turner, president of Car Concepts, based in Thousand Oaks, Calif.

“The Big Three brands for quite some time have been over-dealered – more dealers than they need to have,” Turner said. “Nationwide, Chevrolet has 4,000 dealers. Compare that to Toyota with 1,400 dealers. That is a huge imbalance.”

One automaker, Hyundai Motor America, is trying to woo skittish buyers by promising to let them return cars free for up to a year if they lose their jobs and can’t make the payments.

The “Hyundai Assurance Program” applies to customers stricken by misfortune outside their control, such as losing their job, becoming disabled or losing their driver’s license for medical reasons. It covers depreciation up to $7,500.

Richard S. Joseph, director of the Joseph Auto Group, a collection of 15 dealerships locally, said there was a noticeable uptick in showroom traffic and sales in the last two weeks of December, thanks to pent-up demand and manufacturer incentives. Otherwise, in the last quarter of 2008, sales were rocky, he said.

“I think the election sidetracked purchases. There was glum economic news and lots of uncertainty about many domestic manufacturers,” he said.

Mike Castrucci, president of Mike Castrucci Automotive, said his Mike Castrucci Ford Lincoln Mercury of Alexandria bucked the national trend as new-vehicle sales were only off by 5 percent.

“We experienced exceptional growth in 2007 and to have only dropped our volume by 5 percent – as far as I’m concerned, that’s a win,” Castrucci said, without giving sales figures.

Economic stimulus programs, low fuel prices and a stable stock market could bring rising consumer confidence and growth by the second half of 2009, he said.

“I’m optimistic,” Castrucci said. “I’ve always said that Cincinnati doesn’t see the highs and doesn’t see the lows of the rest of the nation.”