SOUTH FLORIDA INTERNATIONAL AUTO SHOW
Dealers ‘don't know what to expect' from South Florida Auto Show
As the South Florida International Auto Show opens Friday, car dealers cope with a slowing economy but say it's a great time to get a deal.
BY PATRICK DANNER
pdanner@MiamiHerald.com
Car dealers count on the hundreds of gleaming new models at the South Florida International Auto Show each fall to woo customers into showrooms and lift sales.
But as this year's show opens Friday at the Miami Beach Convention Center, there's no guarantee the 10-day event will give dealers that much-needed boost.
''I don't know what to expect,'' said Bill Kelley Jr., owner of Hallandale Beach's Kelley Chevrolet.
That's because the auto industry is reeling, slammed by the economic slowdown and the steep credit crunch. Car sales last month fell to their lowest level in more than 17 years.
The slump has automakers juicing up sales incentives such as zero percent financing, and dealers say customers can get a good price and a good loan -- if they have good credit.
And just in case people needed any more motivation, the auto show is doling out more guest passes than ever before, said Rick Baker, an executive with the South Florida Auto Dealers Association, which stages the show.
After all, Baker said, ``The object of the show is to stimulate interest in automobiles.''
Some South Florida dealers say sales are off anywhere from 30 percent to 50 percent. Some are coping by slashing advertising and trimming staff.
Kelley recently decided to put his dealership, started 55 years ago by his grandfather, on the market. ''It's a convergence of all these factors that made me say, hey, maybe it's time to put up a for-sale sign and see what we catch,'' said Kelley, who also cited his health as a reason.
Kelley said his decision to list the dealership may be behind industry speculation that he's closing his doors. That's not the case, he insisted. But the rumors aren't surprising considering the quickening pace of dealership closings this year.
Nationwide, 590 new-car dealerships had closed through September, the National Automobile Dealers Association reported. Only 13 were in Florida.
The NADA predicted 700 closings by year-end -- similar to 1991, when there was a recession -- and another 900 next year. By comparison, 430 dealerships closed last year. There are about 21,000 new-car dealers.
MARKET SHARE
Too few cars are selling relative to the number of dealerships -- particularly for U.S. carmakers whose market share has plummeted, said Mike Maroone, president of Fort Lauderdale-based AutoNation, the largest automotive retailer.
''It's not a healthy situation,'' Maroone said.
And if General Motors and Chrysler merge, that likely will mean fewer makes to sell and more wrenching dealer contraction.
''There's no doubt that some [dealers] are feeling that apprehension about what the future holds,'' said Alex Kurkin, a Miami lawyer who represents dealers.
Kurkin expects a few South Florida dealers to shut down soon. He said he represents some dealers in discussions to surrender their stores to manufacturers.
The region already has seen some consolidation. Holman Enterprises sold its Miami Lincoln Mercury franchise to nearby Metro Ford, 9000 NW Seventh Ave., in September.
`UNSETTLING'
''One of us needed to consolidate with the other,'' said Glenn Gardner, a Holman vice president in charge of its South Florida operations. ''Business conditions made it very difficult to survive. It's very unsettling to see the state of the business right now.'' Miami Lincoln Mercury had been in business for 58 years.
Holman has been on the other end, as well. In December, Holman acquired the Phil Smith Ford franchise in Pompano Beach and combined it with Pompano Lincoln Mercury.
Blake Chevrolet Cadillac in Homestead isn't for sale, but owner Pete Blake has put the real estate -- the showroom and land -- up for sale intending to lease it back if a buyer is found. He wants to use the cash to ''recapitalize the business'' during slow times.
Monthly new- and used-car sales have fallen to about 1,100 from 1,900 a year ago at the eight South Florida dealerships owned by Craig Zinn. He's now using an outside company to wash his stores' cars to save money.
CUTTING FAT
After cutting fat, Zinn said, ``Now we're dealing with bone and muscle.''
Miami dealer William Lehman Jr., who has 10 franchises, said with sales almost half of what they were a year ago he has reduced his workforce by 15 percent this year. He now has 433 employees.
Asked what it will take for business to improve, Lehman answered, ``I hope it's Barack Obama.''
He added consumer confidence needs to be restored. ''When they feel unsettled, they pull back on everything,'' Lehman said.
The loss of home equity has been the key problem in consumer's willingness to buy a new vehicle, said Paul Taylor, chief economist with the National Automobile Dealers Association. Consumers, in essence, are not feeling as flush as before.
A lot of the recent decline in car sales has been blamed on tightening credit markets, particularly for buyers with less than stellar credit.
The perception is that the market has locked up entirely, Taylor said, but anyone with a good credit history shouldn't have a problem obtaining a loan.
''It's actually a great time to buy a car in terms of pricing, incentives and availability,'' Taylor said.
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