Transcripts

The Art of the Car Deal In Challenging Financial Times

PAUL KANGAS: For many U.S. car dealerships, problems in the auto industry could mean the end of the road. So, dealers are getting creative and offering unusual incentives to drive sales. Take for example, the buy one, get one free offer now up for grabs at one south Florida Dodge showroom. As Jeff Yastine explains, that's not the only strategy dealers are trying these days.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: We've all seen plenty of dealer promotions. But this one is a topper: Two, two, two for the price of one. That's what it's come to for dealers like this one, a Dodge showroom in Davie, Florida. Sales manager Ali Ahmed says it's aimed specifically at his inventory of pickup trucks and here's how it works: Buy a full size $40,000 vehicle and get a cheaper, basic pickup as well. The idea is to get disinterested tire-kickers to become interested buyers.

ALI AHMED, SALES MGR., UNIVERSITY DODGE: It's tough. It's very tough. What you have to do is you have to get creative. You have to get creative with ideas, kind of like this one. You just have to be on your feet. You got to be a good operator. You got to know what you're doing.

YASTINE: Indeed, because some dealers have gone bankrupt after extending too many car loans to too many bad-credit customers. Nationwide, the National Automobile Dealers Association expects 700 dealers to close their doors by year-end. That's one of the largest one-year declines on record in the ranks of new car dealers, which have been steadily eroding for years. Most dealers say the credit situation at least has improved. In September, almost no one could get financing for a car. Now, if you have good credit, you can get a car loan. The only problem, no one's interested in buying a new car when so many people are worried about keeping their jobs. High-end dealers are adjusting to the new reality as well. Lexus sales are off 40 percent from year-ago levels. But Jim Dunn, general manager of one of the largest Lexus dealerships in the nation, is taking the slowdown in stride.

JIM DUNN, VP/GENERAL MGR., JM LEXUS/MARGATE, FL: I'm not surprised by it at all. I think we've come to expect it. But this happens occasionally in our business. There have been peaks and valleys and it's going to come back up again. Everybody here is optimistic. I think the morale here is very strong.

YASTINE: Still, the dealership has pared back staff through attrition to improve efficiency. It's also keeping customer service a top priority. And that's a key theme among dealers, make sure existing customers stay happy because no when knows when new customers will feel comfortable enough to start buying again. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.