New car sales dip 40% in area

HOPEWELL, Nov 22, 2008 (The Progress-Index - McClatchy-Tribune Information Services via COMTEX) -- GM | Quote | Chart | News | PowerRating -- Fewer keys are clicking into ignitions at local car dealerships this fall. New car registrations fell by 40 percent in the Tri-Cities versus last year. Fewer sales will hit local businesses and governments too, as tax income falls in the near future.

"I think fear is keeping a lot of people out the door," said Craig Strosnider, vice president of Strosnider Chevrolet. He and brother Chris have 61 employees and a 43-year-old dealership in the balance. "Everyone's retrenched. Prices have never been cheaper. I'm wondering where the bottom is."

Registrations of new cars are down sharply locally. In the Tri-Cities and Prince George and Dinwiddie Counties, folks registered 321 cars and light trucks this September. Last year, it was 531.

Prince George showed the largest drop, from 149 to 63 new set of wheels. Dinwiddie showed the least change, with 17 percent fewer new cars.

The Tri-Cities has a glut of recently-opened dealerships, most located along Interstate 95 in Chesterfield or on Temple Avenue in Prince George. Crossroads Ford-Mazda, a fusion of Petersburg Ford and Broyhill Ford, is one of the largest in the state. Also opened or relocated in 2008 were Gateway Hyundai, Crossroads Chrysler-Jeep-Dodge and Burcham's Cycles.

"It's probably as challenging as I've seen in 42 years in the business," said H. Carter Myers III, owner of Carter Myers Automotive, which owns several local dealerships. "Our company went through the Great Depression and World War II, when they didn't even make cars. We plan on weathering it, but it's a pretty challenging time with every day's news and concerns from the consumer."

Lots are lined with cars and short of people across Virginia's 550 dealerships, said Michael Allen, spokesman for the Virginia Automobile Dealers Association.

"Obviously sales are pretty challenging right now. October was a dreadful month," he said. "A lot of that is due to consumer uncertainty."

Consumers with fewer worries on their mind and solid credit can nab deals during the turmoil.

"If you're looking, it's an incredible time," said Allen. "All the other factors are really in place ... other than consumer confidence."

Strosnider agreed, saying that sales have picked up slightly this month.

"Those that come in ... we've opened up some eyes," he said. "It is a buyer's market. There is money to lend and there are good loans to be made."

Myers agreed, citing credit unions and smaller banks as sources.

"Some of the customers don't know there's financing out there. If you have reasonably decent credit, there's plenty of money for people to borrow," he said.

Myers said that Hondas and Hyundais sold strongly this year. He and Strosnider agreed that Chevy trucks are faring well. Both lauded the progress GM has made and their current products.

"Our lineup has never been better from a quality standpoint. But here we are in the worst economy possible," Strosnider said.

People are also holding back on maintenance work, as some dealerships are seeing that income erode.

"It suggests that people are putting off service of their vehicles they would normally get. From a safety standpoint, that creates some concern," Allen said.

The pain could spill past car dealerships. Fewer new cars could mean lower personal property tax income for local governments and impact services.

"In doing forecasting for next year, we're seeing some amount of decrease," said Lori Stevens, Dinwiddie's commissioner of the revenue. "It's hard to really pinpoint that."

The county is anticipating an 8 to 10 percent loss in personal property tax revenue. Hopewell saw an increase this year versus last year, Treasurer Terri Batton said.

Congress and the White House are considering a bailout for General Motors, Ford and Chrysler like the lifeline thrown to financial companies. Those company's struggles have compounded dealer worries.

"I think that certainly adds to it, no question, when you've got manufacturers that are having some challenges," Allen said. "They're asking for a little help to ride out the storm."

Strosnider is concerned about the fallout if those companies fail, since they employee millions, and their suppliers, millions more.

"The ill effects of the Big Three leaving the world would be a bad situation for the American economy. I don't think they realize the ripple effect," he said.

--Patrick Kane may be reached at 722-5155 or pkane@progress-index.com.NEW CAR REGISTRATIONS

Locality Sept. 2007 Sept. 2008 Change

Colonial Heights 77 51 -34%

Dinwiddie 88 73 -17%

Hopewell 71 44 -38%

Petersburg 73 45 -38%

Prince George 149 63 -58%

Tri-Cities combined 531 321 -40%

Virginia 34469 27407 -20%

Source: Virginia Auto Dealers Association

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