Dealing with the fallout

Local auto dealers, already enduring a year that has seen new car sales fall by as much as a third in Baton Rouge, say things may be starting to level off.

While they’re mixed about whether the financial woes of Detroit’s big three have been keeping buyers away, all interviewed said their primary battle has been against perception — the steady drumbeat of bad national news souring consumer confidence locally.

The Obama administration said Thursday that Chrysler and the Treasury Department were unable to convince some of the company’s debt holders to renegotiate terms and would have to seek Chapter 11 bankruptcy protection. General Motors’ deadline to reach an agreement with Treasury is not until June 1, with major concessions needed from the labor unions and bondholders. Ford, meanwhile, is hemorrhaging money, but said it is increasingly looking like it will not need to strike a deal with the federal government.

Locally, sales of new cars have been sliding for more than a year, and the year-over-year gap has been widening steadily, according to figures from the Louisiana Office of Motor Vehicles. In the first quarter of last year, new car sales in Baton Rouge were down 7 percent compared with year-before levels. By the second quarter, the gap had risen to 14 percent and then to 19 percent and 20 percent in the third and fourth quarters, respectively.

In the first quarter of 2009, the gap had risen to 32 percent, with dealers selling 5,225 cars compared with 7,712 the same year-ago period.

For further comparison, Baton Rouge auto dealers sold 8,274 in the first quarter of 2007, over 3,000 more cars than they sold in the most recent three-month period.

The situation is perhaps best summed up by Bob Israel of the Louisiana Automobile Dealers Association, who said recently that the March numbers were cause for optimism.

They were down only 38 percent compared with 42 percent in February.

And the slump is felt on the showroom floor, with salesmen going from selling 125 cars a month to one where they’re selling 80 and 85, said Frank Lopinto, general manager of Salsbury’s Dodge City.

“It’s hard to get used to those days when you’re only moving one and two cars,” he said.
The pain has not been felt evenly, and those interviewed are a self-selecting group. Some dealers did not return calls for comment.

Eric Lane, vice president of Gerry Lane Enterprises, said his business — new and used cars — is off about 10 percent for the first quarter.

“I’m not happy with it, but it’s manageable,” he said.

Steve Nunez, new car sales manager at Ralph Sellers Chrysler-Dodge-Jeep in Gonzales, said new car sales are only down about 3 percent there, which, these days and in the broader context, isn’t bad at all.

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