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GM California Dealers Fret Over Stalled Economy, Lack of New Product

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GM California Dealers Fret Over Stalled Economy, Lack of New Product

By Erik Derr

WardsAuto.com, Mar 17, 2010 8:05 AM

LOS ANGELES – It’s not a lack of consumer interest, but a lack of product supply and accessibility that’s keeping General Motors Co. from capturing a larger piece of California’s auto market, dealers say.

California long has been dominated by import brands, which currently control more than 70% of the market. Any sign of GM gaining ground here could indicate a broader comeback on the horizon for the auto maker.

“With cars like the (Chevrolet) Equinox and Camaro, people are coming in and taking another look at us,” says Scott Wright, president and CEO of Stewart Chevrolet-Cadillac, located in the peninsula community of Colma, south of San Francisco.

“(But) right now, we can’t get a lot of new product,” he tells Ward’s.

Wright also says he can’t match leasing deals offered by more-aggressive luxury competitors, due to GM’s cautious return after its decision during the height of the economic downturn to forego leasing altogether. In the game of price comparisons, he says, “a hundred bucks is a hundred bucks.”

Farther south in the upscale San Diego suburb of Carlsbad, Chris Murphy, president and general manager of Rorick Buick-Cadillac, has seen his team sell more vehicles in the year’s first two months than all of first-quarter 2009.

Customer interest, Murphy says, notably has jumped for such models as the Buick LaCrosse and Regal, as well as the Cadillac SRX. Had availability of more new product not been an issue, his latest sales numbers “could have been even better.”

Chevy Camaro drawing buyers to dealer showrooms.

The story is much the same throughout the state, says John Symes, Southern California director for the National Automobile Dealers Assn. and owner of Symes Cadillac in Pasadena, Land Rover Pasadena and Toyota of Pasadena.

“I think GM dealers as a group are in a holding pattern,” he says. “Everyone wants to get going, we have good product, but from my seat the numbers just aren’t there yet.”

The state’s economy continues to be weighted by key indicators, including a housing market that is stuck in low gear and an unstable growth pattern. The most recent unemployment rate was pegged at 12.5% in January and upwards of 15% in some regions.

“We were the biggest boom, and now we’re the biggest bust,” says Symes. “I think the resolution for this is a longer term than anyone would like to admit.”

Add the fact California historically has been “ground zero” for import car companies that have dominated the market through “a disproportionate amount” of marketing and subsidies, and it’s no mystery why domestic auto makers are reeling here, he says.

In a January market report, before the brunt of Toyota Motor Corp.’s recall troubles, the California New Car Dealers Assn. reported a 3.6% rise in new light-vehicle registrations for fourth-quarter 2009, ending the year with a 28.3% drop in overall registrations compared with 2008.

That compared with a 21.2% decline in total U.S. registrations in 2009, with the Detroit Three auto makers claiming a 28.8% share of the California market.

The state dealers association anticipates a 10.3% rise to an estimated 1.14 million new-vehicle registrations in 2010, of which 589,675 vehicles are expected to be Japanese-made and 296,555, or a declining 26.0%, will come from GM, Ford Motor Co. and Chrysler Group LLC.

European imports are forecast to account for 183,200 units registered, while Korean brands are expected to claim the remaining 75,570.

Although the dealers’ commitment to GM hasn’t faltered through bankruptcy and management’s “musical chairs,” or the recent recall of 1.3 million Chevy and Pontiac models for power-steering fixes, many of those Symes represents question the company’s direction.

They point to GM’s announcement last year it planned to close about 2,000 dealers nationwide, followed by an “abrupt” decision earlier this month to reinstate 661 of those targeted sellers. “I think dealer relations with GM are very strained,” Symes says.

Not everything is glum for GM in California. Lane Barajas, general sales manager for El Camino Real Chevrolet in Monterey Park, a top-selling dealership in the Los Angeles market, reports an estimated 6% rise in sales for the year’s first two months.

Barajas isn’t afraid to say Toyota’s latest losses have boosted his business. He also suspects the safety-recall scandal has “helped GM get a chunk of its California market share back. The pendulum looks to be swinging back our way,” he says.

El Camino Real hasn’t escaped the chilling effects of the economy. SUV sales have slumped and the sales staff has been fielding a few more questions than usual about GM’s reliability.

But Barajas sounds almost giddy when he talks about the Camaro and how his team has sold 120 units of the redesigned muscle car in the last 90 days. “People waited five years for this to come out,” he says of the car. “You know what you want, and no matter what happens, you want that car.”

The bottom line about Californians, he says, is they like nice things. “We’re a car town.”



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