Auto industry reeling as sales drop nationwide

Dealerships offering more fuel-efficient models to meet demand

By Owen Boss

GARDNER — As a direct result of the consistently rising cost of gas, the national auto industry has reported the lowest sales for the month of June in more than a decade, and dealerships across the region have noticed consumers trading in larger model vehicles for cheaper, more fuel-efficient cars, which could affect sales this winter. One dealership that has seen a significant drop in sales on some of their larger-model vehicles is Mathieu Ford in Winchendon, where General Sales Manager Todd Wheeler said the next few months are going to be crucial. “The increased gas prices are definitely affecting sales on some of our larger vehicles, there is no doubt about that,” said Mr. Wheeler. “A lot of people are trading in their trucks and SUVs for smaller models, but some people aren’t willing to take the big loss on a trade-in.” According to Mr. Wheeler, this past winter the dealership saw fewer trucks sold than usual, and he expects to see a similar outcome as the summer ends. “We are still selling a bunch of cars and we have seen a big increase in the number of Focuses we’ve sold over the past three months,” said Mr. Wheeler. “We are waiting to see what is going to happen this fall, it will be interesting.” A New York Times article recently reported that Detroit automakers are among some of the hardest hit during the past month’s nosedive with Ford Motors sales down 28 percent, General Motors off 18 percent and Chrysler dropping 36 percent. National auto sales have dropped more than 18 percent during the month of June, leaving automakers expecting to sell well fewer than 15 million new vehicles this year, which is far fewer than the norm this decade which has been more than 16 million vehicles annually, according to the same Times article. The Associated Press reported that General Motors sales are down 16.3 percent this year, and last week’s General Motors stock price closed below $10 a share for the first time since 1954. Although dealerships are aiming to sell their larger models through offering zero-interest, long-term financing deals, owner of Chair City Auto Sales, Mark Babincsak, said fuel prices are having a tremendous effect on how dealerships are marketing their vehicles. “People have always looked for price because people want the least expensive car that they (can) get,” said Mr. Babincsak. “I’ve been trying to buy fuel-efficient cars, but you can’t get them at auto auctions. When you go to the auctions there are fewer fuel-efficient cars, the cars that are ending up there tend to be SUVs.” Although he recognizes the importance of purchasing smaller, more fuel-efficient models, Mr. Babincsak said in New England, it’s still important to offer larger vehicles for the winter months. “I’m trying to at least buy what I can because I know that in the fall people are going to be looking for more 6-cylinder SUVs for winter driving,” said Mr. Babincsak. “Since the gas crisis, everybody is just holding tight on buying anything. This isn’t just necessarily cars but just everything in general. They are waiting to see if gas goes up to $5 a gallon, or if it goes back to down to something like $3.50, maybe they can breathe a little.” Another local dealership that has been dealing with higher demand for fuel efficient vehicles is Twin City Auto Sales Inc., where Marketing and Finance Director Aaron Cosgrove said it’s all about knowing what the consumer wants. “From a marketing point of view we need to pay close attention to what is going on. A lot of dealers don’t know their market. You have to know who the customer is and what is their budget,” said Mr. Cosgrove. “If you don’t line up what the customer wants and what you have to offer them, it all falls apart.” Despite the recent decrease in national auto sales, Mr. Cosgrove said business has been fairly regular, and that the impact of rising fuel and food prices are contributing to the current dilemma. “The cost of everything has gone up recently, if you own a home and you have to fill that oil tank you have to deal with that,” said Mr. Cosgrove. “People cannot control the price of fuel, but they can control what they pay for a car.” oboss@thegardnernews.com

Appeared on Page 1 on 7/9/2008 (Vol. 206 No. 161)