Automobile dealers are stressing bargains, not bailouts, amid a mountain of bad news concerning General Motors Corp. and the beleaguered industry.
As lawmakers and analysts debate a multibillion-dollar rescue of the industry, auto dealers are doing what they can to convince customers to buy vehicles.
"I tell our sales people, don't listen to the news accounts and keep on doing what you are doing," said Chuck Lucci, general manager of Rohrich Cadillac on West Liberty Avenue, on Thursday. "It's business as usual. That's the attitude we are taking."
New vehicle sales in Western Pennsylvania are expected to decline 10.4 percent in 2008, according to the latest forecast by the Greater Pittsburgh Automobile Dealers Association.
Dealers are doing what they can to boost sales, offering low- or zero-interest rate incentives and cash givebacks.
"General Motors is having a 'red tag' sale that offers good bargains" on most of GM's new models, said Lucci.
He said business is off about 20 percent this year, and he hopes to improve that with the help of the sale, which lasts until year's end.
Competitors also are offering deals, and some are trying out different ideas to attract attention.
George Benson, owner of New Benson Lincoln Mercury in Whitehall, is offering 50 shares of Ford Motor Co. stock as an alternative to $100 in cash rebates available for 2008 models. Ford shares closed at $1.90, up 6 cents yesterday.
"I thought it would be a fun thing to do," said Benson. "We've gotten a fair amount of play out of it in the media and our advertising, and we've had a few people take us up on the offer."
Chrysler says it will continue to offer incentives that include cash rebates of up to $6,000 and discounted financing on 2008 vehicles. After reeling from a 32 percent drop in September sales, Toyota began zero-percent financing on most of its models, prompting analysts to predict that it could post better-than-average October sales and potentially surpass GM for the first time as the U.S. sales leader.
Dealers say they continue to battle the impression that qualified buyers can't get credit.
"That's the biggest thing we have had to deal with," said Bud Smail, president of the Smail Auto Group, which sells 10 domestic and international brands in Westmoreland County, including GM models.
"There's a misconception that there is no credit available," he said. "Of course, if you have a low credit score around 400, you won't be able to get a loan just like it is anytime, but you can with respectable credit. It doesn't have to be perfect."
Analysts say GM may need as much as $30 billion in aid through 2010, and its stock price might keep sliding after tumbling almost 90 percent this year. GM shares closed yesterday at $2.95, down 13 cents.
GM needs $15 billion in 2009 for operations and may require the same amount in 2010 for expenses, including a payment to a union retiree fund, Himanshu Patel, a JPMorgan & Chase Co. analyst, said.
GM likely will get the federal bailout it is seeking because the economic impact of GM failing would be too great, said Richard Applegate, president of First Commonwealth Financial Advisors in Indiana, Pa.
But Applegate said he does not believe GM will be able to survive as a stand-alone company, unless there are major changes. "I think GM will have to merge with the other auto companies," Applegate said.
Talk about letting GM fail doesn't sit well with Benson, of Benson Lincoln Mercury. "It means lost jobs and lost tax revenues," he said.
"It would not only affect dealers, but all their suppliers as well," said Smail. "That will affect millions of jobs, and I don't think the government will let that happen."
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