US auto dealers glad to see more tires being kicked
Brookline, Mass. — Robert Cahalin was testing out the back seat of a 1983 Buick Century Sedan in the Allen Buick showroom here. ''I've got to buy a new car,'' he said after scrambling out. ''My 1978 Mercury Monarch has got 110,000 miles on it. It's worn out.''
The auto industry is counting on people like Mr. Cahalin to help keep the three-month upturn in auto sales moving. Though last year's sales were so bad that any improvement now looks good, auto dealers expect a continuing steady rise in sales. ''People have been tied down so long, they're ready to bust (onto the auto market),'' says William Polsonetti, general manager of Allen Buick Company.
Last week, domestic auto sales continued for the 10th consecutive 10-day period to be higher than corresponding times of the past year. Annually adjusted, the selling rate for the month of January was 6.1 million units, up from last year's 5.4 million units. And auto production for the month was up 40 percent from the same time in 1982.
Wesley Stuchlak, an automotive economist at Chase Econometrics, says his firm forecasts a 16 percent increase in 1983 model-year sales over 1982. (The model year runs from October to September.) He adds, however, ''It will be a fairly slow recovery.''
Even though last January was an exception - terrible weather and consumer uncertainty over General Motors' prices made it one of the worst selling months in history - dealers' spirits are up.
''The trend is up and that's what we wanted,'' says Robert Daly, communications director for the National Association of Auto Dealers (NAAD). Over the last four years, Mr. Daly says, about 4,000 dealerships have gone out of business. ''Some will be coming back, but the future holds fewer dealerships selling more cars.''
Don Donofrio, owner of Skyline Ford in Salem, Ore., can't pinpoint the reasons for the better sales. In December he grossed $1 million in new-car sales; in the same month of 1981, it was a mere $579,000.
''Everyone in our area (greater Portland), is having the same experience,'' says Mr. Donofrio, who is also director of the Oregon chapter of the NAAD. ''We have a lumber economy here, and I don't know why people are buying. There's still a down economy here; I guess those that are working are spending their money.''
Mr. Donofrio does have some ideas, though. He says it's not one factor that has pushed car sales up, but a combination that includes financing, lower gas prices, steady car prices, new models, a drift back to bigger cars, and people being forced to buy new cars because old ones have finally fallen apart.
Mr. Cahalin, who was interested in buying the $11,420 Buick ''or a car like it,'' said he had been thinking about buying a secondhand car, but the 11.9 percent financing helped to change his mind.
''The 11.9 percent isn't a big incentive,'' said Virgil Glenn, a salesman at Allen Buick, ''but it helps in some cases.'' In any case, it's being widely advertised; a neon pink ''11.9'' on a black banner spreads the news across the showroom window.
The good thing about 11.9 percent financing is that ''it is a constant'' kind of offer, ''not a gimmick,'' says David Cole, director of the office for the study of automotive transportation at the University of Michigan. He says he believes automakers will try and hang on to the financing rate until the market rate matches it. ''When you had gimmick after gimmick,'' he said, people were holding back, waiting for better deals. Another Allen Buick salesman said, however, that a lot of people buy their Buicks without financing - and for them, rebates are a better lure.
For the American auto industry, Mr. Cahalin might represent a model buyer for two reasons: He is finally turning in his old car (and doing it, in part, because of attractive financing), and he wants to stick with a big car.
''The consumer is making a slight trend back to larger, luxury models,'' says John Haldeman, owner of Forest Hills Motor Company in Pittsburgh. ''They are comfortable, and gas prices are down. And compared to a few years ago the big car is now a fuel-economy car.''
Mr. Haldeman, who keeps track of western Pennsylvania dealers, says dealers in this depressed industrial area ''seem to think a slow recovery is coming. Underneath everything, there is a little bit of optimism coming in, and it's about time.'' For his fairly small Ford business, he predicts a 10 percent sales increase in 1983.
Ellen Metcalf, who does automotive consulting for Arthur D. Little in Cambridge, Mass., agrees that demand for domestic autos is rising. But ''it's important to note,'' she says, ''that it has been freed up in the higher end - in the better models and sports cars. It will be a while before the middle and the bottom part of the wave occurs. We need a continued expectation (by consumers) that life will be better than what it's been.'' Sales growth will be steady, she says, but not spectacular.