ECONOMY: Car industry slump reverberating through North County

By CHRIS BAGLEY - Staff Writer | Saturday, November 15, 2008 5:22 PM PST ∞

Questions about the auto industry's survival loom especially large in old-line manufacturing states but a collapse of any of the big American carmakers would also reverberate all the way to North County.

The Center for Automotive Research, an Ann Arbor, Mich., think tank funded by state governments and those manufacturers, recently warned that the U.S. economy could lose 3 million jobs if all three were all to collapse.

America's car culture feeds a vast array of industries, from mechanics to car washes to dealers. The failure of any one manufacturer could wipe out several hundred jobs at San Diego County dealerships, which now employ about 12,000 people. Thousands more work at parts stores and other car-related businesses.

Chris Baker, whose Bob Baker Auto Group sells a range of foreign and domestic brands in Carlsbad and El Cajon, is one of many dealers who say the current slowdown could drive several out of business.

Escondido, Carlsbad, Temecula and other cities with dealership clusters also are feeling the pinch because taxes from car sales account for a quarter or more of their sales tax revenue.

Drivers can't delay purchases forever, dealers said. A statewide dealers' association recently forecast that "pent-up demand" probably will begin to kick in late next year.

A similar situation exists for independent repair shops, which employ about 9,000 people in San Diego County, according to data from the state Employment Development Department. Shop owners say they're being hit by the downturn, but they and others in the car industry say if they can hold out into next year they should bounce back strongly.

Car-related businesses employ a total of about 35,000 people countywide with a total annual pay of about $1.3 billion, according to a North County Times analysis of state data.

Those numbers include studios that design cars for two major manufacturers, Mercedes in Carlsbad and Nissan in La Jolla. Nationwide sales of those two brands this year have fallen by just 2 percent and 3 percent, respectively, compared to 16 percent for both Ford and GM's Chevrolet brand. A total of about 90 people work in the two studios, representatives said.

"It's a very exciting time, in contrast to what one reads about the industry," said Bruce Campbell, a vice president for design at Nissan's facility.

Higher gasoline costs this year have cut deeply into Americans' family budgets this year, leaving them less money to spend on cars and everything else. Fuel prices have dealt a particular blow to sales of the full-sized trucks and sport-utility vehicles that bring the industry its fattest profits.

In a sense, expensive gasoline is helping to keep designers employed, Campbell said: Along with political pressure for alternative energy sources, it is pushing automakers toward radically different designs. Some alternative forms of energy give designers greater freedom and flexibility, he said.

Engineers and designers are working on cars that would run on hydrogen compounds, according to people in the industry. Roy Kim of the California Fuel Cell Partnership said several automakers could introduce hydrogen-fueled models by 2015. The only emission from hydrogen fuel cells is a dribble of water. A different class of engines, combustion engines that run on hydrogen-based fuel, emit small amounts of carbon dioxide, Kim said.

A current lack of hydrogen stations is one factor limiting the spread of all such cars. San Diego County has only one hydrogen-fueling station, in Chula Vista, compared to a dozen in the Los Angeles metro area.

A station set to open next year for military vehicles at Camp Pendleton could later be among the first to open to the public, he said.

Richard Wallace, a transportation-systems analyst at the Center for Automotive Research, said new types of cars could help to keep alive America's love affair with cars, even as gas-guzzlers lose traction, and even if public transit gains more of a foothold.

Cars' role in the national infrastructure will remain important, Wallace said. About 25 percent of most large cities' land area is occupied by roads, parking lots, dealerships and other car-related businesses, Wallace estimated. In suburban areas, driveways and cul-de-sacs drive that figure as high as 40 percent, he said.

Roads alone account for 14.5 percent of developed land in North County's nine cities, but denser development has cut that from 16.3 percent in 2000 and will probably cut it to about 13 percent by 2030, according to the San Diego Association of Governments.

On the national level, such percentages won't change significantly, Wallace said.

"Think about the last time you saw a road that existed that doesn't exist anymore," he said.

Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com. Bagley blogs about local economic trends at bizblogs.nctimes.com.

Wholesalers of motor vehicles and parts 1,765 $753

Car and truck dealers 12,090 $924

RV dealers 484 $826

Motorcycle dealers 894 $688

Other motor vehicle dealers 113 $1,113

Auto parts stores 3,340 $572

Tire dealers 1,395 $670

Gasoline stations 4,427 $371

Towing companies 1,032 $629

Parts manufacturing 1,061 $788

Car repair, maintenance 9,298 $627

Total, privately owned vehicles 35,786 $707

Buses, taxis, limousines 1,397 $470

Sources: California EDD, NCT research and analysis