Business

Auto sales plunge hits Kentucky, too

A dismal year.

No question.

Automakers reported their sales figures for December on Monday and 2008 became the worst year for the industry since 1992. Dealers in Central Kentucky said they felt optimistic for the future but relayed tales of just how difficult it is to persuade people to drive away in a new car.

It was a year that claimed nearly a thousand dealerships nationally, with about 50 closing in Kentucky.

Last year was one "that you don't really know who you are," said Paul Cleaver, president of Lexington's Freedom Dodge Chrysler Jeep. Nationally, Chrysler reported U.S. sales drops on Monday of 53 percent in December and 30 percent for the year.

The lower sales meant cuts throughout the year at Freedom Dodge, where the work force shrank to 85 people from 120 in recent years. The sales staff alone fell by more than a third, from 25 to 16.

In Versailles, Jack Kain of Jack Kain Ford has called 2008 the worst year of his 55 selling cars.

"We cut personnel. We cut all kinds of things," he said, hours before Ford announced that its U.S. sales fell 32 percent in December and 21 percent for the year. "I think anyone was silly who didn't do that because if you didn't do it, you'd be out of business."

And many did go out of business. Of the roughly 50 shuttered dealers in Kentucky, Kain said, many dealt only in used cars. But the year also claimed some big names.

Johnny Watkins' dealerships in London closed.

"And some are out and they just have yet to make the announcement," Kain said. "There are some that are just hanging on by their fingernails. Every one of them adds something to the community. They hire people. They do business."

And it's not just the dealers. Toyota's massive assembly line in Georgetown hasn't moved since Dec. 17, idled because of mounting inventory. Its U.S. sales fell 37 percent in December, more than both GM and Ford, and dropped 16 percent for the year.

Late Monday, The Associated Press reported that Toyota will suspend production at all 12 of its plants in Japan for 11 days over February and March, a stoppage of unprecedented scale for the automaker.

GM reported a sales drop of 31 percent in December and 23 percent for the year.

Earlier in the year, it lost an outlet in Frankfort. Jeff Sachs Autopark, once the dominant dealer in the state's capital, closed in mid-July.

"It put fear into customers' eyes," said Jim Hughey, general manager at the rival Bob Allen dealership, which sells Chryslers. "Believe it or not, I would like to see another dealer there."

Gone would be the empty lot that's a constant reminder of a missing GM dealer. In a different economy, he said, Bob Allen would probably snap up the license to sell the vehicles of the once-dominant Detroit icon.

"With things improving, I'm sure it would be a thought in our mind," Hughey said.

And that's the dealer mantra. Things have nowhere to go but up.

With gas prices down from their $4 highs in summer, Cleaver said he's seen more interest in SUVs, pickups and minivans.

"I've had a Smart car sitting on my front row for three weeks, and I've had just one person come in and look at it," he said. "I'm not sure the American public ... is ready to restrict themselves in a hybrid or electric or a two-seater."

Some buyers took advantage of 2008 tax incentives in the last week of December, nearly doubling what has become a "normal" sales week with 53 sold.

"It seemed like old times," he said.

But it may have just been a one-time boost. He says January and February will be tough.

"I think the key to our year is March, April and May," Cleaver said. "I'm hoping that sometime during the January and February time frame that we see some of the credit issues get eased."

The credit crunch has taken much of the blame for the industry's crisis. Credit markets clammed up last year in the face of the housing market meltdown, as financial institutions severely restricted their loans.

It has ended many leasing opportunities, too, which were also hurt by concerns about trade-in values.

"That has probably cost our dealership 15 to 20 deals a month," Cleaver said of leasing's woes.

"It's all about credit," he said. "We're not just car salesmen, we're finance brokers."

The federal government's $700 billion bailout has already seen an easing on credit. GM's financial arm, which received a $5 billion cash infusion, said last week that it will begin lowering certain credit criteria to make more people eligible to buy.

And manufacturer discounts "have been unbelievable," Cleaver said.

Garry Shivel of Berea took a test drive on Cleaver's lot on Monday in a 2006 Jeep Commander, aiming to replace his aging Kia Sportage.

He's been looking at the prices for the last six months or so, and said they've dropped considerably.

But the next customer on the lot wasn't so sure.

Carol Nelson of Lexington came looking for a Jeep Sahara for her 33-year-old daughter, whose sales rep job has meant too many miles on her current vehicle.

"I think they're too expensive," she said, as she eyed a line of Jeeps at the New Circle Road dealership. "I think they've got a lot of Jeeps on this lot, and I think they would be jumping up and down to get someone in one."

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