The Auto Market and You

The Auto Market & YOU
As auto manufactures prepare to go back to the government are buyers the BIG winners?
By: Charlie Grooters, Grand Rapids, MI
Every month for years, car manufacturers and dealers have advertised if you don’t buy now,
you will miss the biggest savings in history. For people who were in the market to buy a new vehicle, those savings and deep discounts were a big reason why they chose to buy when they did and what they did. Today, the national media makes it sound like absolutely no one is coming into dealer showrooms to buy a new car. All we tend to report and hear about the unfortunate people who have lost jobs and make up the 10 to 18% unemployment in many areas. For those people, now is definitely a time to be conservative and save. But, should we really believe that the other 80% to 90% of the people, while they may be conserving, are completely out of the retail market and not spending money? Have you tried going out to eat on a Friday or Saturday night in West Michigan?Plan on an hour plus wait. Obviously people are out spending money, but what about big ticket items like cars? According to Brad Dodge, General Sales Manager at Harold Zeigler Chrysler Dodge Jeep in Grandville, “general floor traffic is certainly less than it was a year ago. However, yearly sales are off less than five percent. Almost every customer
that comes into the showroom to look at cars or that is having their car serviced comments
on how many people are here looking at cars. The perception the media has given them is that we have dust mites in the showroom not customers, but the reality is that during the week we are talking to an average of 15 customers plus receiving 10 sales calls and at least a dozen Internet leads; on the weekend we are seeing 35 to 50 customers.” Most dealers I spoke with aren’t seeing the kind of traffic that Dodge and his team at Harold Zeigler in Grandville are, but still are reporting that the people who do come in are more serious buyers. Dodge agreed. “The people that are coming in have made it through all the negativity in the media and have made the decision that if the deal is right they feel comfortable buying a new or pre-owned vehicle now,” he said. “A lot of our customers come in hoping to keep their payments the same and are surprised with all the incentives that they are actually lowering their payment. We
have had a lot of people that aren’t just buying one car, but once they see the deal, decide to replace two cars.”
Another rampant rumor is that loans just aren’t available, and if you can get a loan you
have to have perfect credit. According to Ross Todd, Finance Manager at Zeigler, “The banks are
certainly tighter than they were a year ago, but we are still getting loans for 95% of the customers that want to buy a car.” Anyone over the age of 30 remembers when you had to put down 20% and have good credit to buy a house or a car. At some point all that changed according
to Todd, “Loans went from short term with down payment, to longer term with down payment, to leasing with zero down and crazy low payments, to long term loans with zero down, and then to long term with zero down plus adding a bunch of negative equity from the previous car.,” he said. Not only was this happening on cars, but the banks did the same thing for people on homes. Unfortunately,many people assumed they could afford whatever the bank would approve for them. Not only did the days of putting money down disappear, but so did the basic requirement of needing good credit to get a loan. Nature burns a forest and leaves it black when the undergrowth gets to thick, but then it grows back richer and better than before. It seems like we are seeing the same things happen with the credit markets. Too many bad loans were
made, the banks are paying the price, but good lending will come back with the lessons learned
from these mistakes.

Scott Comar, General Manager/Vice President Harold Zeiglers in Grandville, believes we
are in the ultimate buyer’s market and that right now is the perfect time for people to take advantage of the perfect storm of incentives. “Normally when you see incentives increase, other incentives decrease, but right now every pipeline is open from Chrysler for incentives,” he
said. Comar believes this is because Chrysler has a point to prove before going back in front of Congress. “When Cerberus bought Chrysler two years ago, they immediately started an overhaul of the company and were well ahead of schedule before the bottom fell out of lending, gas prices soared, consumer confidence fell, and the big 3 execs were bashed in front of Congress,”
he said. “The reality is they wouldn’t have been asking for a loan if the entire economy didn’t tank. What nobody has heard is that Chrysler already had a complete written plan when they first visited Congress; they went with a plan, not for a handout. The piece the
government asked for that wasn’t in that original plan were union concessions.”
Since the public bashing of the big 3 execs in Congress, we have now seen major import manufacturers report double digit sales declines, losses and shut downs of plants. It would be wrong to say that the domestic manufactures have not made plenty of mistakes, but what about the once invincible imports that are dealing with recalls and massive losses?
So are the buyers really BIG winners today?According to Comar, you should look at what you
are getting for your money. “It’s not just about the deal, it is what you get for your money,” he said. “Chrysler had less than half as many recalls in 2008 than Toyota did – so I think people should be confident that they are getting a quality vehicle when they buy a Chrysler product.” Comar goes on to clarify what is available right now. “When you look at the incentives you get today every pipeline is wide open,” he said. You don’t have to choose what you get,
you get them all:
1. Employee Pricing (typical savings from retail of $3,500 - $5,000)
2. Factory Rebate (ranging from $1,000 -$4,000)
3. Regional Bonus cash (up to $1,000)
4. Chrysler Financial bonus cash ($1,000 on most vehicles)
5. 0% Financing for 48 months (additional savings vs. standard rates averages $4,000)
6. Owner loyalty (up to an additional $2,000 for current Chrysler owners)
7. Lease loyalty (another $750 for current Chrysler lease customers)
8. Plus congress just passed tax deductions for buying a new car
Add them all up and in February of the 2009 you are saving $8,000 to $15,000 off a 2009
model plus you get a lifetime warranty. Comar believes that “Because all manufacturers have
drastically cut production for the remainder of the year, when supplies come back into line with today’s demand, that will allow the manufacturers to step back from these over inflated incentives and start to keep some of their profits again.” Obviously, it is impossible to predict what will happen in the future, but this reporter and the folks at Harold Zeigler in Grandville are convinced the deals available right now are truly the“Deal of a Lifetime”