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Highlands Today

How Are The Local Auto Sellers Doing?

Jasmina Meyer/Highlands Today

Jimmy Brown rotates the tires of a customer's vehicle in the service department of Bill Jarrett Ford Mercury on Thursday in Avon Park.

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By GARY PINNELL

Highlands Today

Published: December 14, 2008

SEBRING - "It's been a tough year."
Stanley Wells doesn't mind admitting it. In previous years, he was selling 65 Dodges and Chryslers a month. In 2008, he's averaging maybe 40.

But the dealership started by his uncle 77 years ago has survived $4 a gallon gasoline, the fickle rejection of pickup trucks and SUVs by his customers, and now the meltdown of the Big Three automakers in Detroit.

In Tampa, five automobile dealerships are in bankruptcy. But Wells doesn't expect those problems in Highlands County.

"We're still here," said Wells, from his Avon Park office. "We'll make it through another year."

Big New York investment banks Bear Sterns, Lehman Brothers and Merrill Lynch failed this year, but local banks have remained healthy.

It's the same for all three of Highlands County's auto dealers: Wells, Alan Jay and Bill Jarrett.

"I think we're positioned as well as anyone in the country to survive this," Bill Jarrett agreed.

Jarrett also operates Ford, Lincoln and Mercury dealerships in Davenport, Winter Haven, Plant City and Dade City. Jarrett started in the car business in 1979 with his father, Dick, and took the Avon Park dealership in 1980, so he's faced four economic downturns in the Carter, Bush I, and the Bush II administrations.

A National Problem

For over a decade, U.S. auto sales have been about 16.5 million cars and light trucks per year. Last year, sales fell to 16.2 million. After the economic collapse in the second half of 2008, full-year sales could dive to 13.5 million, Forbes magazine said. Standard & Poor estimates 12.8 million.

If either forecast is correct, it's a waking nightmare - for Detroit, for dealers selling cars on the highway, and for America itself.

As of October, GM's sales were down 45 percent from 2007. Four plants have been closed or idled in America, Canada and Mexico. Even Toyota and Honda have announced U.S. production cutbacks. As for the Germans, BMW is down 10 percent for the year, Mercedes down 5 percent, and VW Audi down 2 percent, according to a November article in Forbes.

One reason why: gasoline prices have tripled during the past five years. In 2008, the price of a gallon of regular topped $3, and steadily climbed over $4.

In response, pickup trucks and SUVs were parked on the sides of streets and highways. Owners of used Suburbans and Hummers, once the most expensive, desirable and gas-guzzling vehicles on car lots, were having difficulty trading for a gas-efficient Focus or Prius.

The Unexpected

That's all over, said Alan Wildstein, whose Alan Jay Automotive Network owns six GM, Chrysler, Ford, Nissan, Kia and Toyota dealerships in Sebring.

Today, a gallon of regular gas is cheaper than water - $1.68.

"More than the impact of fuel prices, they're offering $4,000, $5,000, $6,000 rebates," said Wildstein, who bought the Chevrolet, Oldsmobile and Nissan dealership in Sebring 17 years ago.

"People don't want to drive little bitty cars," said Wells. "They've gone right back to buying what they want to buy."

"The biggest unanswered question in the automaking business is what to produce," said Jarrett.

So, are foreign cars still selling better than American cars?

"That's an ironic question," said Wildstein. He'd just been discussing that very topic with his staff. "Domestic cars are keeping up with the import cars," he said.

"I'm not sure why that is," he said. But sales of all cars, imports and domestics, were up in December. "There's not really one brand knocking them dead."

That's due, in part, to the time of year. Thanksgiving to Christmas is the pinnacle for retailers like Wal-Mart and Circuit City. In central Florida, Wildstein, Jarrett and Wells agreed that Christmas through Easter is the prime selling season. That's when, as Wells puts it, "our Northern guests come down and bring revenue to the community. And that's holding true this year, in relative terms."

Cutbacks

With sales off 20 percent across the board, and 40 percent in some months, Alan Jay has reduced inventory.

So has Wells. "When sales slow down, we don't need as many cars in stock." In past years, there were 130 new cars on the lot, and 70 used. Now the numbers are more like 90 new and 50 used.

And although Chrysler, GM and Ford are pushing cars onto lots faster than dealers can sell them, Wells and Wildstein know the day may come, probably next year, when the Big Three won't have as many vehicles, and some may be hard to get.

Actually, business has been down for three years, Wells said. "We're looking forward to next year. There's gonna to be some pent-up demand. You just gotta still be here when the time comes."

"We check every expense, every day," Jarrett said. He's eliminated overtime, centralized accounting, cut the advertising budget, and curtailed sponsorships of events.

The auto sellers aren't worried about the manufacturer's warranty. Jarrett and Wells say they've have had little feedback from customers who worry that if they buy a Ford or Dodge, and if the automaker goes out of business, there'll be no company to stand behind the powertrain and the bumper-to-bumper warranties.

In fact, Wildstein says, Congress has assured auto buyers that the government will step in and honor warranties.

Who Loves Ya?

Following days of hearings and hours of intense debate, the $14 billion bailout of the Big Three passed 237 to 170 late Wednesday. Twenty Democrats and 150 of the 202 Republicans in Congress voted against the bill. Then, on Thursday, the Senate rejected the bill, and the bailout failed.

"They're idiots," Wildstein said of the House opponents, then softened. "They're ill informed."

The import automakers in the U.S. have donated hundreds of millions of dollars to members of Congress, he pointed out.

Republican Sen. Richard Shelby is from Alabama, which has its own Big Four: Toyota, Mercedes, Honda and Hyundai. "I'm going to oppose the package because I think this is just the down payment on billions and billions to come," the senator said this week.

"He has a vested interest in seeing (GM, Chrysler and Ford) fail," Wildstein charged.

Highlands Big Three

Like Detroit's Big Three, it's imperative to Highlands County that the big three auto sellers survive, Wildstein reminds. Car dealers generate millions in sales taxes and document fees for the county.

In a county without many manufacturing jobs, they also support charities and children's baseball teams, and employ some of the highest paid workers. Alan Jay has about 300 employees on the payroll, Jarrett 58, and Wells 28. The numbers were higher in January. There have been few layoffs, all three said, just employees who left and weren't replaced.

So, what should their customers make of the bad economy, the $14 billion bailout of the Big Three, the threat of bankruptcy?

They should be concerned, admits Wells. But then again, he points out, with rebates, employee pricing and low interest rates, "It's the best time it's ever been to buy a car."

Gary Pinnell can be reached at gpinnell@highlandstoday.com or 863 386-5828

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