Area car dealers have hope as they try to match 2007 sales figures

Despite new auto sales being down by as much as 45 percent for some car labels in the U.S., area car dealerships are bucking the national trend, according to the latest figures from the state Department of Revenue. A drop in gas prices, along with aggressive vehicle discounts, give some local car dealers hope as they try to match 2007 sales figures.

The 16 new car dealerships operating in Bollinger, Cape Girardeau, Perry and northern Scott counties reported selling 5,042 vehicles so far this year, according to department figures posted online Thursday.

Those dealerships sold 7,056 cars in all of 2007.

The current numbers from 2008 could be off if dealers aren't keeping up with their reporting requirements, said Department of Revenue public information officer David Griffith. Though most dealers submit their reports electronically, which produces real-time numbers, Griffith said some submissions by paper may be a month behind.

Michael Schumer, owner of Bening Mazda in Cape Girardeau, is not surprised by the findings.

ELIZABETH DODD ~ edodd@semissourian.comRicky Latham, salesman with Bening Mazda in Cape Girardeau, left, says goodbye to Brenda Albers of Dongola, Ill., and her husband, Kim, on Friday after they viewed a hard-top Mazda convertible.

"Each area is different, and ours is obviously a community that is very supportive of one another," Schumer said. "With two hospitals and a number of other solid businesses, we have pretty good stability."

Tim Coad has two dealerships in Cape Girardeau and another in Jackson. Coad said that in recent weeks he has seen an increase in new car sales, particularly sport utility vehicles and full-sized trucks. He said he expects that trend to continue as long as gasoline prices remain near their current level.

"When oil prices are down and gas is around the two-dollar mark, I've noticed that sales do OK," Coad said. "But when it's around the four-dollar mark, our sales struggle."

Brandon Long, sales and finance manager at Crown Chevrolet in Marble Hill, Mo., said SUVs and full-sized trucks seem to sell well regardless of the cost of a gallon of gasoline. "People here seem to always need their trucks more than a smaller car," Long said. "But in this economy, people don't have extra money, which has caused customers to considering purchasing more used cars."

AAA reported that the average price of regular gasoline nationwide was $2.85 per gallon a month ago, compared to $1.98 on Friday. Locally, gas prices can be found around 40 cents lower than the national average.

"Before we saw gas prices where they are today, I think people were very cautious about the way they spent their money," Coad said. "For a while, people were being hit hard on all levels of higher prices for expenses, such as food, gas and credit card interest. Now that we've seen gas go down, people have that extra money to begin saving for purchases like a new car."

Since he owns three lots in Missouri and another in Illinois, Coad had briefly thought about consolidating. But he said that his father, Joe, taught him not to overreact when times are difficult.

"We've been in this business for many years and didn't want to make a decision based on a brief dip in sales," he said.

Coad recalled his father purchased the Cape Girardeau Chevrolet dealership in 1979, when it was common for interest rates to reach as high as 20 percent. He said that while his father struggled during that era, he survived. And Coad believes that his father's experience is relevant to the current times.

"We hung on then and were in better shape in the long run," Coad said.

Schumer agrees with Coad that the current situation is only a short-term cycle.

"This industry has had tough times before, and I expect us to get through this time," Schumer said. "I'm optimistic we'll turn around here on a local level because gas prices are going down and the community is so supportive."

Nationally, sales of new cars are at their lowest in 17 years. According to Autodata Corp. and Ward's AutoInfoBank, October sales had dropped 32 percent compared to October 2007, with General Motors having the largest decrease at 45 percent.

To increase sales, the Big Three are offering incentives to draw in potential customers, including low and zero percent financing and thousands of dollars off the sticker price.

"People may not realize this, but now is a great time to buy a car," Schumer said. "With what's being offered, customers should take advantage of offers from dealerships."

To help an industry that has been rattled with billions of dollars lost this year, some congressional leaders have given the Big Three automakers a chance to make their case for $25 billion in urgent assistance. But they demanded the automakers provide a detailed plan for using the money to assure their long-term viability without additional financial assistance.

The Senate and House of Representatives will explore the issue Dec. 2, with a vote Dec. 8. Though supported mostly by Democrats, Republican Sen. Kit Bond of Missouri has supported the plan.

Southeast Missouri State University economics professor Bruce Domazlicky believes it could be six months before sales nationally begin to significantly increase.

Given national trends in the industry, this is not really surprising," said Domazlicky, who also serves as director of the Center for Economics and Business Research at Southeast. "Given uncertainty about the economy, still somewhat tight credit conditions, it seems that sales are not likely to pick up anytime soon.

"We need to see some definite recovery in the economy before buyers come back to the showrooms in significant numbers," he said. "... Credit conditions, while improving, continue to make it difficult for some people to get financing for a new vehicle. So until we see the economy improve and credit conditions loosen a bit, the industry will likely continue to struggle."

The Associated Press contributed to this report.

bblackwell@semissourian.com

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