Tough for Car Dealers = Good for Buyers!

Category: New Cars, News. Written by Cameron Wong 

The car industry has been a punching bag in 2008. In turn, it’s been a difficult year for those trying to sell cars, maybe the worst year ever. Everything from gas, to the economy and general consumer confidence has hurt those trying to sell cars.

Gas
When the gas prices started to sky rocket, car buyers started to change their purchasing habits. Certain car makers adjusted accordingly, while others tried to ride it out. What happened was, the auto makers like Toyota and Honda that pushed their hybrids and smaller engine cars, found a way to generate revenue when other cars weren’t selling.

Many of the companies in Detroit, waited a little too long, and thus it hurt them. They continued pushing performance and horsepower, and tried to “weather the storm”.

That didn’t work, instead they took a beating.

“When gas prices started going up, it really hurt the car industry,” says Frank Hasselback of Landmark Motors in Kirkland. “People weren’t buying what they normally would. The higher end sedans, SUV’s, and trucks just sat there on the lots. People started to really look at gas mileage when they normally wouldn’t. Hybrids got real popular.”

Hybrids
The high gas prices led to a hybrid boom. Toyota’s Prius, Honda’s Civic, Chevy’s Malibu, and Saturn’s Aura Greenline, just to name a few, all became hot sellers. Hybrids became a way for the auto industry to make money. While monster vehicles like the Chevy Tahoe could be bought at near invoice prices, the mark up on Hybrids were considerable (maybe that’s why Chevy came out with the Tahoe Hybrid). Despite the increase in greener small engine vehicles, there’s was limited selection. Many bought, but it didn’t make up for the downfall in the other vehicles.

Economic Crash
October’s record market crash of over 900 points crippled the car industry. Not only did consumers not want to buy cars, it made it nearly impossible even if they did.

“People couldn’t get loans,” explains Hasselbach. “After that, things were frozen. It seemed like everything just stopped.”

Before the crash the outlook was already dismal. Auto lenders were afraid of making the same mistakes as in the housing industry.

Chairman of Autonation, the largest auto retailer in the U.S. told the New York Times, “We are faced with the dilemma of lowering our credit standards to put them in a car, or saying no”, he says, ”And we’re telling them no.”

Many lenders wouldn’t give loans to car buyers unless they had a credit score of 700 or better. That is the crème of the credit crop, and only a small number of people could qualify.

What’s to Come
Car dealers are hoping that by the first of the year, things will slowly get better. The industry itself knows what can and can’t be sold now. Hybrids and 4 cylinder cars will continue to be the focuss. And while it’s been a bumpy ride, and has been the worst year for sales in nearly a decade, there’s nowhere to go but up.

“We could use all the help we can get in terms of public perception”, says Hasselbach. “Some consumer optimism would really go a long way.”

Sounds like a perfect time to buy.

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