Car buyers worry about GM's future
In vehicle showrooms across the country, questions about the future of auto giant General Motors Corp. add to the usual haggling and give-and-take.
Car shoppers have been kicking the tires a little more cautiously as salespeople try to ease their worries about service warranties, resale values, and even whether GM dealerships will still be around in another year.
The general manager of Rose Chevrolet in Hamilton, Ohio, north of Cincinnati, gathered his sales force this past weekend, before GM's bankruptcy announcement. "Here's what we need to stress, guys," Ed Larkin said at the dealership along a busy highway. "Rose Chevrolet is going to be here; we're going to be here selling vehicles and here to service their vehicles. That isn't going to change."
But GM's troubles are a concern for those who own or are considering buying one of the company's vehicles in a recession that's eroded the financial security of many households. Customers concerned about being able to service those vehicles must consider GM's plan to force 1,000 to 1,200 underperforming locations to close their doors as the automaker tries to thin dealer ranks to make remaining outlets more profitable.
GM plans to cut more than 2,600 dealers by the end of 2010. The company expects to lose 500 Hummer and Saturn dealers when those brands close or are sold, and it expects 400 dealers to close voluntarily. Another 500 would be consolidated into other dealerships.
"This is a major purchase by consumers; they don't make it very often and they want more stability," said Michael Robinet, vice president of global forecast services for CSM Worldwide, an auto industry consulting company based in Northville, Mich. "Consumer loyalty has been shaken by a lot of factors."
Leo Chavez, a Chicago-area realtor, said he's feeling GM's pain himself. He's been trying to get out of his Pontiac Grand Prix, a discontinued GM line, but said its trade-in value has fallen and dealers use that against him in bargaining. "I'm very disappointed with GM, I really am," Chavez, 30, said Saturday at Chicago's Grossinger City Autoplex, where he wanted to trade for a used Toyota Camry. "I have more faith (in) Toyota."
Just outside the nation's capital, jazz played in the showroom of an Alexandria, Va., dealership Saturday as veteran car salesman Earl Jones, 50, talked about a year that has been "like being on a rollercoaster."
Foot traffic and sales have slowed at the dealership, he said, and customers have become bolder in demanding bargains on GM cars. "People come in and they ask us for the most ridiculous deals," Jones said, but added he's going to stay positive as he keeps selling cars.
"They control what they've gotta control," he said of GM's leaders. "In here, I've got to control my destiny."
Linda Bentley, 61, scanned the car lot with a salesman for the 2009 Malibu she planned to buy. The retired federal employee typically buys American-made cars, but GM's situation nearly scared her off.
A mechanic convinced her she should stick with GM. "He made it sound like it's an institution, it's not going anywhere," Bentley said.
Debbie Praeger is a stay-at-home mom in Mequon, Wisc., whose loyalty to a foreign brand illustrates another problem for GM. She just bought another Toyota Camry to replace a '98 version that was so reliable she never considered buying from one of the U.S. automakers. "It's certainly not because I don't want to keep jobs at home. I do," said Praeger, 53. "But there are things people need to do to take care of themselves, especially if you don't have a lot of money."
Some GM dealers still fly giant U.S. flags and urge people to "buy American," but the foreign automakers have also become part of the landscape with U.S. plants and community involvement. "I think that's mostly in the past now," Dennis Sullivan, a Miami University economics professor, said of buy-American appeals. "I tell my students that they can buy American cars made by Honda in Marysville, Ohio, and by Toyota in Georgetown, Ky."
Sullivan, who owns a Pontiac Vibe from an Oxford dealership that's gone out of business, noted that even in the Reds' Great American Ball Park in Cincinnati, birthplace of the first professional franchise in the sport known as "the national pastime," the vehicle on display beyond the centerfield fence is a Toyota Tundra.
At a dealership in Santa Monica, Calif., an outdoor banner hung from two palm trees assuring that its business is "30 years long, still going strong." Steve Fischer, 56, a gold coin dealer from Los Angeles, was in the market for a new Corvette convertible. He was aware of GM's looming bankruptcy filing, but is confident the company will bounce back.
"They're not going to disappear," he said. "GM is too big." At Rose Chevrolet, Larkin is making plans to mark the dealership's 25th anniversary in June. There'll be a luncheon and recognition for longtime employees, and a celebration with customers. He's hoping to be able to offer big incentives to buy new Chevrolets; he expects the restructuring to improve long-term opportunity for the dealership.
Jim Meador, of nearby Darrtown, is also staying optimistic about the company whose cars, trucks and vans he's been buying for three decades. "It is a part of America and has been for a long time," he said. "And hopefully, it will be for a long, long time to come."