The major U.S. car manufacturers’ recent struggles can translate into headaches for local auto dealers, though the dealers say such ups and downs are a normal part of business.
The Chrysler Group lost $1.5 billion in 2006 and announced this week it would cut 13,000 jobs. The news came after General Motors and Ford announced major job cuts as well.
“Chrysler’s problem was it produced too many units,” said James Edwards, general manager at Heritage Auto Plaza in Alexandria. “They didn’t slow down the pace to meet the lack of demand.” As a result, Chryslers often remain on area lots, and dealers are charged interest as long as they remain unsold, said Edwards, who cut about 40 employees from his dealership over the past six months or so.
“It’s painful, but we’ll get through it,” Edwards said. When new car sales are down, manufacturers often must rely on their other operations, such as service and financing departments, to stay afloat, said David Hyatt, chief public affairs officer for the National Automotive Dealers Association, based in Washington.
Sales in 2006 for the U.S. dealers were down approximately 8.2 percent, while the Asian manufacturers were up about 5.1 percent, according to statistics from industry analysis firm Ward’s Auto. “There’s Toyota, and then there’s everybody else,” said Jack Fitzgerald, president of Fitzgerald Auto Malls, of Montgomery County. “But this is a very stable market in the Washington metro area; our economy is very strong. It’s not good to hear manufacturers are closing plants, but the public votes with its pocketbook.” Business has been steady for Darcars Toyota in Silver Spring, with Toyota and Lexus models driving the business, according to general manager Brian Smith. The company, which has 10 Chrysler dealerships in the area, is still ordering Chrysler vehicles at normal volume.
“Sometimes you don’t always make the best business decisions, because you want to support your partners,” Smith said. “It adds more challenges and more pressure, but it works out. When you’re in the car business, you understand there are cycles.”
Lou King, general manager at Ourisman’s World of Ford in Alexandria, said business is actually up, largely because the store is the only dual Ford and Lincoln Mercury franchise in the area. “Morale among Ford dealers is pretty high right now,” King said.
