Car Dealers Maintain a Brave Face : Autos: But trade tensions, thinning ranks and a dismal year put an edge on the dealers’ annual convention in Texas.
From the clinking glasses, lavish spreads and dinner dances at the annual National Automobile Dealers Assn.’s meeting here, you might not guess that America’s 24,000 car dealers have just clambered out of one of their worst years ever and are heading into another with dismal prospects.
But under the outward cheer--almost a requisite character trait for car salesmen--are signs that something is amiss.
Seminars on such subjects as expense controls and “Keeping Your Customers for Life” are fuller than in years past, though the crowds at the convention are sparser--down about 15% from last year, when the Persian Gulf War dulled the turnout.
Those who managed to make it are acutely aware of the thinning in their ranks--an attrition of almost 700 dealerships last year that makes many fear they may be next.
“There’s a recession on,” said Jack Decker, a Buick dealer from Plainville, Conn., as he surveyed the crowd. “And there are less car dealers out there.”
Trade frictions between Japan and the United States are a central theme of the conference, which runs through Tuesday. A luncheon forum titled “Trade War Looming” is scheduled today, while several of the exhibitors showcasing “Buy American” paraphernalia attracted heavy traffic.
Dozens of dealers walked out on Richard Recchia, the head of Mitsubishi’s Cypress, Calif.-based American sales operations, who gave the keynote speech Saturday.
The first representative from a non-American auto maker to kick off the 75-year-old NADA convention, Recchia criticized the Big Three U.S. auto makers in blunt, abrasive remarks that seemed sure to further strain relations between the Japanese and U.S. auto industries.
“Detroit is pressing hard for a ‘Buy American’ movement, while at the same time they are selling over a half-million units of Japanese imports and transplants under their own brands,” Recchia said.
Recchia--a former Chrysler Corp. executive and frequent critic of Detroit--also noted that the “Buy American” campaigns sweeping the country had resulted in vandalism and threats of violence at several Japanese dealerships in the Detroit area.
Initially concentrated in the Midwest, dealers now say the “Buy American” battle cry has begun to take hold even in import-prone California.
John Campbell--who operates Buick, Ford, Mazda, Nissan and Saturn franchises in the Los Angeles area--said he noticed a significant drop-off in traffic at his Japanese outlets and a corresponding increase at his domestic dealerships after recent negative comments about American workers and managers by Japanese government officials.
Unlike some Midwest consumers, Campbell said, Californians “will not buy a domestic car just to buy a domestic car.” But more of them are giving domestic brands a chance to prove their quality.
Rick Boucher, whose Chrysler dealership in Sherman, Tex., touts the “Buy American” theme, left in the middle of Recchia’s speech.
“I had all the Japanese I could handle,” Boucher said.
But for many NADA members, the majority of whom own both domestic and import franchises, such flag-waving is something of an anachronism--especially for those who have counted on their Japanese franchises to carry them through the sales slumps of their domestic outlets.
All of the 345 new-car dealerships that went out of business in the first half of 1991 sold domestic makes, according to the trade publication Automotive News, and nearly as many are thought to have bowed to the recession in the second half of the year.
“We’re selling a lot more Toyotas than Chevrolets,” said Ted Eriksen, who also sells Oldsmobiles through his dealership in Ukiah, Calif.
“Toyota buys my red wine,” he added, lifting his wineglass at a party Saturday night.
Still, Eriksen worries that the well-publicized game of tit-for-tat between the U.S. and Japanese industries could cause unwanted friction between himself and the seven other dealers in his small Northern California town.
“All our families socialize together, and it’s been a little touchy lately,” Eriksen said. “We need to make sure that we as car dealers don’t get at each other’s throats. We’re all Americans.”
Joyce Simpson--who owns a dealership in Sanger, Calif., selling Fords, Lincolns, Mercurys and Toyotas--said everyone needs to focus less on trading insults and more on turning the economy around.
“I think we have better things to worry about,” said Simpson, whose business has been off about 30% since October.
Indeed, with dealers going out of business in droves and those that survive eking out an average profit margin of just 0.7% in 1991, many dealers are wondering what to worry about first.
NADA economist Tom Webb forecasts a 10% increase in vehicle sales for 1992 over last year, but admits that the extra volume may not push dealers much past the break-even point.
“There are too many same-make competitors in the market area,” Webb said. “And some franchises are over-dealered. We don’t expect a steep drop-off in the number of dealers, but there will be a slow process of decline.”
Dave Edmark, owner of Edmark Chevrolet in Nampa, Ida., shrugged at this opinion.
“You’ve got to be optimistic.” Edmark said. “The good dealers are going to survive. That’s the car business.”
