Car buyers in the driver's seat

November 7, 2008 4:01:55 PM PST
With auto sales slumping, consumers who do venture onto car lots find themselves with a sort of sticker shock.And not because the prices are too high, but rather because hurting auto dealerships are going to great lengths these days to make a sale.

Not too long ago, buying a car could be a "take it or leave it" proposition. But, those days are quickly disappearing in the rear view mirror.

Now, it's the buyers who are in the driver's seat.

"Absolutely, we're negotiating right down to the bare bones," said Scott Lustgarten of Martin Main Line Honda.

It's a simple case of supply and demand.

The dealers have hundreds of cars gathering dust with customers nowhere in sight.

Car showrooms are a lonely place for salesmen. Even brands like Honda that have weathered previous downturns are suffering, with sales off 20 to 25 percent.

"Honda tries to manage between a 30 to 40 day supply of cars," Lustgarten said. "Right now, dealers are looking at 60 to 90 and up in terms of day's supply."

Unsold cars are jamming the pipeline for both domestic and foreign makers.

The dealers need to move them off the lots now, which means big discounts for customers.

"The manufacturers have given great deals out there, thousands of dollars in rebates, zero percent financing available," said Joe Magarity of Magarity Chevrolet.

Giant gas guzzling SUVs are the toughest sell in this market. They're getting the biggest discounts, $11,000 or more in some cases.

But, even best sellers like the Chevy Malibu are deeply discounted. One we found was $3,400 off the sticker.

Dealers say consumers have been scared off, in part, by news that credit has gotten tighter.

But, they say local banks have stepped in to take up the slack with attractive interest rates.

"You'll get thousands off the sticker price, you'll get a great interest rate, great leasing rates great buying terms," Magarity said.

Car dealers always say "now is the time to buy," but they've never seen anything like this.

Many are struggling to survive.

The dealers association says, if things get worse, it will have a devastating ripple effect.

"When you really take a look at the automobile industry, its breath is major in the impact of what this country is, so a turnaround in the auto industry is vital for a turnaround for a turnaround in the country," said Kevin Mazzucola of the Auto Dealers Association of Greater Philadelphia.

Already nine dealers in Philadelphia and the four surrounding counties have closed their doors. Others are laying off personnel.

Clearly, they are ready to make deals.

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