Area auto dealers set to weather storm better than others in nation
'We prepared for hard times,’ firm’s owner says
New-car dealers across the country are looking at hard times in the coming months, and those in the Grand Valley are no different.
But they’re also better suited to weather the storm than many dealers across the country.
“We prepared for hard times,” said Mike Ferris of Western Slope Ford Lincoln Mercury Toyota, 2264 U.S. Highway 6&50.
Ferris survived the local economic collapse that followed the demise of the oil shale boom three decades ago, and the lesson took.
“There were so many problems nationally created by excess leveraging and excess borrowing,” Ferris said. “We’ve worked hard over the years to minimize that.”
As a result, “We’re doing fine.”
Likewise, said Bob Fuoco of Fuoco Motor Co., 741 N. First St., it’s good to be debt-free.
“We’ve been here 70 years, and I don’t owe anybody anything,” Fuoco said.
Far from cracking under the weight of the credit crunch and recession, Ed Bozarth Chevrolet Pontiac & Buick Inc., 2595 U.S. Highway 6&50, is moving ahead on two construction projects and extending the company name to Las Vegas.
“We think this is a great time to grow,” General Manager Mark Miller said.
Miller and the father-son team of Ed and Kent Bozarth bought a failed Las Vegas dealership and reopened it Dec. 9.
The experiences of the Grand Junction new-car dealers run counter to the grain of the auto business of late. None has had to downsize or lay off employees, even though they all acknowledge the future of the industry is bumpy at best.
“Consumer confidence locally has been tainted,” Miller said. “But not nearly by what has been done in the national scope.”
Nothing has dampened enthusiasm for Bozarth’s new Saturn dealership building adjacent to the Chevrolet dealership or the new building for used cars, Miller said.
The tribulations of the auto industry over the past three months have dominated headlines, but the car business’ troubles didn’t just begin in 2008.
During the past eight years, auto sales have tumbled 23 percent in Colorado, from 208,000 new-vehicle registrations in 2000 to 160,000 in 2007, according to the Colorado Automobile Dealers Association.
Over that same period, Colorado’s population grew more than 15 percent, from 4.26 million people to 4.92 million, according to the state demography office.
Drivers now are holding onto their cars longer, said Tim Jackson, president of the auto dealers association.
“The culture is changing,” and drivers who used to trade in cars with 30,000 to 50,000 miles are now holding onto them for 100,000 miles, Jackson said.
The American car fleet is now an average age of 9.2 years, the oldest on record, he said.
As a result, the buyers who are walking onto dealers’ lots these days are “have-tos” — people who are in the market because they must be — as opposed to “want-tos,” Jackson said.
Even buyers of used cars are more resistant to the buying urge, Jackson said. New registrations for used vehicles fell 7.76 percent from 318,000 registrations in 2006 to 293,000 in 2007.
Tough automotive times already have claimed three Western Slope dealerships, one each in Gunnison, Glenwood Springs and Eagle, he said.
Western Colorado dealers, buoyed by the booming economy of the middle of the decade, have nonetheless been touched in one way or another by the national economy.
“When gas got to $4 a gallon, we sold out of Civics in a month” at the dealership’s Honda store, Fuoco said.
Gasoline prices have fallen sharply since, and “now we’ve come around a full 180 degrees,” Fuoco said. “GMC was our best-selling brand, better than Honda, better than Nissan. What does that tell you?”
Even with all the difficulties as 2008 moved to a close, annual sales volume at Bozarth remained higher than the previous year, Miller said.
With gas prices down, 85 percent of the Bozarth sales were for pickups or sport-utility vehicles, he said.
Nationally in 2008, auto sales fell by at least 3 million units from the 16.8 million sold in 2007, the National Automobile Dealers Association said. The association also projected that nearly 1 in 10 dealerships nationwide would close in 2008 and 2009.
Grand Valley auto dealers, however, don’t anticipate closed doors at their stores, or at their competitors.
“Our economy is better than the rest of the nation,” Ferris said. “Yes, I think all the dealers are going to be successful. They just won’t be as strong as they were in recent years.”
The Bush administration’s $17.4 billion bridge loan to General Motors and Chrysler went a long way to reassure customers the Big 3 will remain in business, Miller said.
Still, in the near term, “there’s going to be a lot of dealerships and possibly a few manufacturers and suppliers who are really put to the test as far as survival,” Ferris said.
Grand Junction Chrysler Jeep Dodge, 2587 U.S. Highway 6&50, is likely to survive just fine, General Manager Mike Edwards said.
Like other new-car dealerships, Grand Junction Chrysler owns its property and has a long history there, Edwards said.
The midrange future remains reasonably bright, Edwards said, acknowledging it appears it might take until June before the business pendulum swings back.
The newest new-car dealership in the valley, Grand Valley Hyundai, 2162 U.S. Highway 6&50, like the established dealerships, experienced some slower months, but now “overall is doing pretty well,” spokesman Sal Iadicicco said.
SUVs make up a good portion of sales, Iadicicco said, but there also is growth in the luxury-car market that the dealership is tapping.
The bridge loans to GM and Chrysler will help not just the companies, but also the industry, by stabilizing it, Ferris said.
“You’re not talking chopped liver when you’re talking Chrysler,” Ferris said. “People don’t realize how big it really is. It’s a major player in the U.S. economy,” and its failure would shake the industry.
Still, Ferris said, “People noticed that,” when Ford chose not seek a bridge loan from the Treasury Department.
Once the market settles, dealers are raring to get back into competition, and each is gearing up for the miles-per-gallon and safety wars.
“The key is to develop products that are fuel-efficient and that are desired by the public,” Ferris said. “It’s a tightrope.”
The coming months will tell who meets that test, he said.
“It will be interesting. We’ll see some people fall by the wayside,” Fuoco said. “And the strong will come out stronger.”