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AUTOMOTIVE: Sales are down, but spirits are up
Our man on Auto Parkway
By CHRIS BAGLEY - Staff Writer | ∞
Car sales representatives Jim Cole and Parvin Dilami talk Thursday afternoon during a lull at Classic Volkswagen in Escondido. Managers said sales are holding up reasonably well. Sales of Volkswagens in California have fallen by about 2 percent, compared to a 19 percent decrease for all brands. (Photo by Don Boomer - Staff Photographer) ESCONDIDO ---- A once-in-a-career slowdown has hit the auto industry, but salesmen at the Escondido Auto Park just north of West Valley Parkway seem to be taking it in stride.
I took a stride of my own through the dealerships on Tuesday afternoon after a dealers association reported that car sales in San Diego County fell by 33 percent this summer after three years of steady, but slower declines. I wanted to see what those figures meant for some of the people whose lives depend on them.
Customer traffic on Auto Parkway was fairly light, even for a weekday.
At North County GMC Jeep, a salesman in his mid-20s said the market's downturn had been a shock mainly to sales people who had been in the business for more than five years.
Many of them had gotten used to earning $10,000 or more a month and typically had to support families, he said. In contrast, a younger rep who brings home just $3,000 monthly is satisfied because he had never earned more in the past, he said.
Salespeople who work for commissions feel economic ups and downs more sharply than workers in other industries, sales manager Mark Hoye noted.
He recalled one customer whose mortgage brokerage was earning $2 million a month just a couple of years ago. The customer bought a luxury vehicle but ended up losing it because he missed payments when his own income dried up.
Hoye said the market shriveled in August and September, mainly, he said, because of the sudden disappearance of several companies that previously had made auto loans. That shows how important it is to save money in fat times, Hoye said, particularly for people whose incomes can vary drastically from one month to the next.
"You've got to roll with the punches," he said.
Jason Rider started working at the dealership earlier this month. He said one of his friends had called him crazy for getting into the car business this year. But he was optimistic, and he said he was confident it would be better than the construction industry, which he had recently left.
I was a little surprised that most of the salesmen seemed so resilient. But it makes sense: Sales requires a certain sort of persistent optimism. I've seen that in my father, who makes his living on commission in life insurance, annuities and estate planning.
My roommate is similarly optimistic, but even he abandoned auto sales two years ago for a job with an industrial distributor. He now sells a variety of machinery to a variety of manufacturers. When one customer is slow, another one is picking up the slack, a sharp contrast to the business of selling just one or two car brands.
And results vary widely from one brand to the next. An industry report earlier this week showed statewide Chrysler sales down 40 percent, Saab sales down 50 percent and Hummer sales down 60 percent. Sales of Hondas, Jaguars and Mercedes were down by less than 10 percent.
Volkswagens are off by about 2 percent.
A sales manager at Classic Volkswagen said that's partly because of the lending dynamic. Finance companies have been more willing to lend on Volkswagens partly because they tend to hold their value for longer than domestic models, he said. When a driver misses payments on a VW, the finance company usually can repossess it and auction it off for close to the unpaid balance, he said.
Still, the manager said the overall lull makes now a good time to spend the day at an offsite training session. The regular salespeople were absent from the dealership on Tuesday.
As he spoke, a customer in his early 30s emerged from the dealership's finance office. He had short, spiky blond hair and a Bluetooth device was clipped to his left ear. He seemed to be in a pretty good mood, maybe because he was getting a new car.
Salesmen at most of the dealerships said financing has been their biggest problem of all since midsummer. Of the 13 automotive lenders that Classic Volkswagen was using last year, only three remain, though those are able to finance most of the deals that the dealership sends to them, the sales manager said.
Citi Financial and North Island Federal Credit Union have cut back auto loans sharply, he said; salesmen at several dealerships noted that North Carolina-based Wachovia and several others no longer exist.
At Heller Ford, all three salesmen on duty were with potential customers. But there was no doubt that fewer people are buying cars than were buying a year or two ago, a sales manager said.
"It hurts," he told me, "and that's all I'm going to say."
Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com. Bagley blogs about local economic trends at www.nctimes.com/blogs/minding_your_business.
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Zeus wrote on Oct 30, 2008 8:45 PM:Cars are a depreciating asset. People have to learn how to manage their finances. Learn to take care of yourself and save money.
someone who knows more than you do wrote on Oct 30, 2008 9:15 PM:So how come they only report on the higher end car lots claiming that they are smail business owners when they are not?? Knowing some SMALL BUSINESS car lot owners myself, the economy is bad right now, and many are suffering and struggling just to stay afloat. So, what gives??
Chris Bagley -- Staff Writer wrote on Oct 30, 2008 10:33 PM:I'm assuming that Someone was referring to me when he said "they only report."
If you read the article, you'll notice that this was about salespeople and sales managers at new car dealerships. It was not about owners' profits or losses. I checked in at Heller Ford, Classic VW, Jack Powell Chrysler/Dodge, North County GMC Jeep, and Escondido Honda, which I think was a fairly representative sample of the dealers in Escondido Auto Park that sell new cars. The way you phrased your post seems to imply that your friends sell used cars. That group certainly merits its own story, and I certainly did not intend this story about new car sellers to whitewash the situation of a different group.
Car dealers wrote on Oct 31, 2008 3:24 AM:unwilling to compromise. We just recently went to a dealer who quoted us $4,000 less than the Blue Book for a trade. Our auto was immaculate, had very low milage. The Kelley Blue Book is the industry standard for trades and sells. This dealer was insulting and basically "threw out" the standard. They can't be hurting that much if they are unwilling to deal. We will keep our car and sell it outright. When it comes time to purchase this dealer will not be on our list.
Patrick wrote on Oct 31, 2008 6:33 AM:All the financial problems right now can be attributed to greed on many peoples part; big banks all the way down to the consumer. Live within your means, appreciate what you have and be satisfied. I can count on two hands how many cars my wife and I have owned over the years, why do people feel compelled to constantly have a new car? I just don’t get it, at least I don’t have any car payments!
Jet wrote on Oct 31, 2008 6:45 AM:My wife and I own two economy cars and they are both fully paid. No car payment, more saving. Plus, we get something else, not for sale, peace of mind. I feel bad for no one who thinks they need a new car every three years. Funny, how some people think that they are entitled to a new car every few years.......welcome to America, the land of entitlement!!
Patrick wrote on Oct 31, 2008 7:00 AM:To "Car Dealers", if your car is in such good shape why don't you just keep it! KBB values are a joke right now, there are so many cars on the market what do you expect?
our 2 cents wrote on Oct 31, 2008 7:17 AM:We just bought a 2008 Ford Escape yesterday. Times are really tough, but we needed a new vehicle so very badly, we feel fortunate today. We've been wise with our little bit of money over the years and our credit is excellent. Our wise choices paid off for us yesterday.
Scooter wrote on Oct 31, 2008 8:02 AM:Nice to see Chris Bagley respond here. It is nice to know that some of the writers stay tuned to what they write, and what the reading population thinks about the article. That was refreshing.
I wonder why we never hear from Ed Sifuentes on here, after he writes one of his articles? He seems to get a lot of posts after he goes to print.....
our 2 cents wrote on Oct 31, 2008 8:53 AM:To Car salesmen;
Like I said, yesterday we bought a new car in Encinitas. The sales people and financing people were very good to us, easy going, not pushy, I even mentioned to them how pleasant our entire vehicle buying experience with them was. They really wanted to sell us a vehicle and made sure we were taken care of and respected without a bit of tension. We'll go back there next time we need a new vehicle.
Chris Bagley -- Staff Writer wrote on Oct 31, 2008 9:48 AM:To address the comment by "Car dealers": Dealers aren't the only ones who have thrown KBB out the window. When gas prices shot up in the spring, people started trying to sell anything that gets less than 20 miles a gallon. The market for used trucks and SUVs, particularly large ones, is in the tank. I don't know if that's true for passenger cars, but I can imagine that a lot of people want to trade into more efficient vehicles, whether they're going from 12 mpg to 20 mpg or 30 mpg to 40 mpg.
FYI, you can check out these articles I did a few months ago:
www.northcountytimes.com/articles/2008/07/06/business/z27196eb9d2d8093288257478007fb0b5.txt
www.nctimes.com/articles/2008/06/29/business/ze763ee0210ebe16f8825746c000476f8.txt
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