12/15/08 — Dealers say Detroit woes taking their toll here, too

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Dealers say Detroit woes taking their toll here, too

By Steve Herring
Published in News on December 15, 2008 1:46 PM

For 28 years Dan Wise, owner of Dan Wise Chevrolet at LaGrange, has watched the ebb and flow of the car market. But never has he seen business plummet so far so fast.

Wise has not been forced to make any layoffs, but he said "some concessions on some salaried positions" had been made because of the adverse affect of the department's production.

Like any business owner, Wise said he has to look at expenses, benefits and "other items you can control" -- for example cutting off the lights and turning the heat down.

It is small comfort, he said, to realize that everybody else is in the same predicament.

"Business is going down," he said. "I'd talk to people and 90 percent would say business is not as good. It is crowding people in and they are mad and want to do something about it."

Wise, whose business has suffered a 25-30 percent decline, said he doesn't think that people truly comprehend the effect that the financial troubles of General Motors and other car manufacturers could have on the economy.

Wise has kept a close watch on Congress and a possible $14 billion rescue package for GM and Chrysler. Ford officials have said they do not suffer from the same short-term cash flow issues.

The House approved the loan package, but it has failed in the Senate. It appears action on any plan is now up to President George Bush.

The congressional debate might appear far removed from Goldsboro and Wayne County, but Wise says that is not the case.

"The automobile manufacturers touch so many lives," he said.

Wise cited a personal example of how he was indirectly affected by the Gulf Storm deployment at Seymour Johnson Air Force Base.

Wise said when he was asked if the deployment would hurt his business that he said "no" because he did not have many military customers.

"But I didn't realize that I was selling cars to people who were selling products to the people in uniform and if they can't dance then they are not going to buy cars from me," he said.

Bankruptcy for the automotive industry is similar, he said. People might not be directly affected, but many are doing business with people who are doing business with the car companies, he said.

The crisis might require brand sacrifices, loss of dealerships and combining franchises, he said.

"So I think anything that creates a ripple in fragile water to begin with is going to make it even more difficult," Wise said. "It will go so deep into this economy it will be unbelievable.

"I think everything started in March and April when gas went crazy. Every family has two cars and when gas goes crazy, people's budgets are adjusted. I think a lot of the problem is people's frustration with the economy in general. I have people say they make cars that people don't want, but they sold three million cars last year. Somebody wanted something."

Doug Henry, owner of Doug Henry Buick Pontiac GMC in Goldsboro, agrees, and, like Wise, said he has seen about a 30 percent drop in his sales.

Other dealerships, including some selling foreign-made vehicles, are experiencing similar drops, he said.

Henry said that all he has heard is that all the Big 3 automakers -- Ford, GM and Chrysler -- made were SUVs and that is why they began to suffer when gas prices skyrocketed.

"The companies make much more than SUVs, but those were what the public wanted," he said. "The companies make a number of models that are fuel efficient and of better quality and more reliable than foreign models."

Both Wise and Henry say that the quality of the vehicles has improved so much that warranty work has declined at their respective shops. But the companies have not advertised properly, Henry said.

"We are victims of them not getting the message out about the mileage, reliability and quality of the American product. Many get 30 miles per gallon or better. Negative publicity has probably hurt sales as well as the economy," he said.

"The media have finally convinced me we are either in a recession or bad economic situation so I am not going out and obligate myself for anything," Wise said.

Henry, who also has a Chevrolet, Pontiac, Buick GMC dealership in Farmville and a Chevrolet dealership in Tarboro, said he would like to see the kind of vehicles that lawmakers are driving.

He said members of Congress are "clueless" when they blast American companies for producing inferior products.

"I think the general feeling on the street is that the government isn't going to come down here and help me get a loan, but there are FHA and Small Business Administration loans that the government helps businesses get," Wise said.

Wise said it is easy to throw darts after the facts.

He said the automobile companies have smart people working for them, but that he didn't think anybody could have forecast how deep the problem has become.

The downturn has been so dramatic so fast that the car companies have been unable to respond in a timely manner, he said.

One problem is that there has been an "inventory glut."

GM helped by putting heavy incentives on cars to help the dealerships move products, Wise said. The heavy incentives, just to get the products off the grounds, have been costly, he added.

Wise said GM might have "missed the market" for smaller vehicles after the gas lines of the 1970s.

"I think foreign manufacturers saw that flaw and came over initially with cheaper labor cost and zapped the market," he said.

Even though the American companies saw what was happening, they were still doing fine with their sales numbers, he said, then gas prices hit $4 a gallon.

GM is coming into the hybrid car market, but later than others, Wise said.

During those "good times" automobile makers made concessions to their labor force. Now that pendulum has swung the other way and labor is going to have to make concessions.

Wise said people also need to look at all that the country has had to absorb in such a short tome -- 911, wars in Iraq and Afghanistan, Hurricane Katrina and the mortgage crisis.

"Look at the burden government has had to carry," he said. "I think the real problems is it (economy) just stopped so fast. When business stops cash flow is not there. Do I think GM will work out of it? Yes, I do. Why, because I think that our products are second to none."

Henry agreed that GM is not going to stop making or selling vehicles.