The best time to buy cars is when its the worst time to sell cars. Car Dealers are ready to sell at minimal profits, and some just want to clear their inventory, so they don’t have money invested in cars sitting away on their lots.
What does this mean to you?
If you are in the market for a car, you can usually pick up the car by countering a price below invoice.
Check out the below article to get a sense of the car dealer industry.
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-carsales_05bus.ART0.State.Edition1.45f7408.html
Auto dealers face tough road with second-quarter sales
12:00 AM CDT on Monday, May 5, 2008
By TERRY BOX / The Dallas Morning News
tbox@dallasnews.com
This spring may generate more heat than most new car dealers want.
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JUAN GARCIA/DMN
Sport City Toyota technician Phillip Russell prepared a 2008 Prius for sale. As the auto industry enters the critical spring selling season – usually a time of solid retail growth – dealers are seeing some real potholes in the road.
Soaring fuel and food prices, tight credit, an unstable economy and the uncertainties of a presidential race are rattling consumer confidence in ways most dealers have not seen in years. No one seems sure what to expect.
“You almost have to go back to the ’80s to find anything similar to this period,” said George Pipas, sales analysis manager for Ford Motor Co.
Moreover, first-quarter sales didn’t provide many clues as to what may lie ahead. Big SUV and pickup sales continued to drop. But so did sales of Toyota’s new Corolla compact and the Honda Accord midsize sedan – with the Corolla plummeting 24 percent. Toyota, in fact, has seen four months of declining sales.
“In the early ’80s, I was working for an auto manufacturer, and it was bad,” said Tom Libby, senior director of industry analysis at J.D. Power and Associates. “It could be about as bad now as it was then.”
New car and truck sales were down 8.6 percent nationally in the first quarter and 6.9 percent in the Dallas-Fort Worth area, the first local quarterly decline in several years.
And some area dealers say April sales were soft, an inauspicious start to the sales season – though April is generally not a great month because of tax season.
“I’ve talked with eight to 10 dealers in the last couple of days, and we’re seeing a confused consumer and an angry consumer, and it has to do with the never-ending increase in fuel prices,” said Drew Campbell, president of the New Car Dealers Association of Metropolitan Dallas. “Until we see a stabilization of gas prices, we won’t see the average consumer getting back into the market.”
At many dealerships, the only people buying are those who need another car or folks who are so affluent that they don’t worry much about gas prices or a volatile stock market.
“I don’t remember any other period when there were this many things weighing on people’s minds,” said Jerry Reynolds, who hosts an auto advice show on WBAP-AM (820) and talks with dozens of dealers weekly. “It’s like there is a distraction for everyone, and I don’t remember ever seeing anything like that before.”
While many auto segments seem unsettled, Mr. Pipas said one trend is clear: Consumers are buying more small cars.
In 2005, small cars accounted for 14 percent of total industry sales, growing to 15 percent in ‘06 and 17 percent in ‘07, he said.
“In the first quarter of this year, it was 19 percent,” Mr. Pipas said. “We are seeing full-size pickups now as trades on the top 10-selling small cars.”
Many analysts and industry observers expect the second quarter to be at least as difficult for the auto industry as the first. Some don’t think the business will recover until 2009.
Local dealers are more optimistic – partly because the economy here is stronger than it is nationally.
“We had a record quarter profitabilitywise in the first quarter of ‘08,” said Sonny Morgan, managing partner of Sport City Toyota in Dallas. “But the business was in Corolla, Camry, Prius, Highlander, RAV4 – not Tundra and Sequoia.”
Ford dealer Sam Pack said his sales were up in the first quarter, mostly from heavier sales of crossover vehicles and cars.
“We’ll get through it, but the $64,000 question is just how deep will this downturn be?” said Mr. Pack, who owns Five Star Ford in North Richland Hills, Sam Pack’s Five Star Ford in Carrollton and Ford Country in Lewisville.
The first-quarter difficulties were a bit of a surprise, said Tom Durant, who owns Classic Chevrolet in Grapevine, the largest Chevy dealer in the U.S.
“January started off like gangbusters, and then everything turned south in February,” he said. “I think it’s 100 percent fuel prices, but I’m not forecasting doom and gloom. I think I can match last year.”
Jim Snell, who owns Snell Buick-Pontiac-GMC and Land Rover dealerships in Dallas and Frisco, said his Land Rover sales are flat, but sales at his Buick-Pontiac-GMC store were up 15 percent in the first quarter.
“I think we’ll be just fine,” he said. “Gas prices are something we’ll just have to live with.”
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