.....Advertisement.....
.....Advertisement.....
Friday, December 05, 2008

National auto woes trickle down locally

Related

This week as the nation's largest automakers lobby lawmakers for an infusion of funds to save their troubled companies, some car dealers in the Roanoke and New River valleys made their own pleas Thursday for a spark in consumer confidence.

A tight credit market, spurring the Big Three automakers' financial struggles, has caused sales to decline, jobs to dwindle and inventory to slim at Berglund Automotive Group in Roanoke, which has dealerships throughout the region and in South Carolina.

And while business has slowed at the Shelor Motor Mile in Christiansburg, the resumed government talks with the auto industry have increased foot traffic and sales this week. That's likely because consumers believe the industry will be saved, said David Hagan, an owner of Shelor Motor Mile.

"It's all about consumer confidence," he said.

Still, after a tough year for consumer spending, the owners of these local dealerships believe that a government bailout for the auto industry would stimulate local sales. The future of their businesses and, they say, the local economy, depends on it.

In October, the number of new vehicles garaged in the Roanoke Valley declined 8 percent compared with October 2007, according to the Virginia Automobile Dealers Association. The number of new vehicles garaged in the New River Valley for October dropped 28 percent from the previous year, based on the association's data.

Similarly, sales are down 35 percent to 40 percent across all Berglund dealerships, William Farrell, president of the company, said Thursday. Berglund sells various U.S.-made vehicles, including Ford, Chrysler, GMC and Chevrolet.

People are wary about shopping for cars and making purchases for fear that they cannot obtain credit, he said. And swelling news of the bailout isn't helping matters.

Sliding sales have forced Berglund to lay off a "handful" of employees in the past six weeks, Farrell said. He would not disclose the number of jobs that have been cut.

Other jobs at the company have been consolidated and altered as a result of the sales slowdown, he said. Berglund employs 500 people at its Virginia dealerships and corporate office.

To cut expenses, the company has scaled back its advertising budget. And it has cut vehicle inventory by half, Farrell said.

Should the large automakers file for bankruptcy, rather than receive a federal bailout, Farrell said the future of Berglund would be in jeopardy. Who wants to buy a vehicle from a bankrupt company, he asked? Sales would come to a screeching halt.

"We would have a serious restructuring," Farrell said. "If we don't get the bailout, it would be catastrophic for the economy and our employees."

At Shelor Motor Mile, sales of automobiles dropped 40 percent in October and November, Hagan said.

The company laid off 50 employees last month, related to its declining sales. Now with 300 employees, Hagan said he doesn't expect more job cuts.

"We think we have it under control, and we're going forward," he said.

In an effort to boost buying activity, Shelor is offering special interest rates for auto loans through its finance company, Hagan said. That's likely driving some sales, because "we've lifted a lot of restrictions and made it easier" to get a loan, he said.

Berglund's Ford dealerships also are offering deals, such as employee pricing for all vehicles and significant rebates.

"We want to move our inventory," Farrell said.

And not to deviate too far from his car sales business, he said, "It's a great time to buy a car."

.....Advertisement.....