By Alan Burke
Steam is coming from the radiator, the tires are deflated and the horn won't work.
At least, that's the picture many have of today's automobile industry. Yet, you couldn't confirm it by talking to North Shore dealers. Times are tough, they declare, but not as bad as you've heard.
"Everybody has to buy a car," explains Mike Schulze of Stutz Volvo in Salem. He is quick to offer a caveat, "Nobody has to buy a new car."
With Detroit's executives banging a tin cup in Washington, begging for loans, with even successful foreign auto makers raising alarms over the current economic climate, it might appear that America's love affair with the car has finally hit a very deep pothole.
Only weeks ago O'Keefe Chevrolet in Ipswich closed its doors with owner Mike O'Keefe citing the tight economy and difficulties getting credit for consumers. "Lately, we've been losing six to 10 deals a month," he told The Salem News, sister paper of the Gloucester Daily Times, "with good people who should have been able to get credit."
Some of O'Keefe's workers have found a new home at Hillcrest Chevrolet in Salem, however. "We're not a big place," says Chris Pike, sales manager there. Selling new cars is only a small portion of his business. Roughly 12 new vehicles a month go out the door.
"Our traffic flow hasn't changed too much." Noting that the holiday season is a traditionally slow period, Pike adds, "Everyone is still making a living. No one's getting rich."
Pike dismisses the idea that consumers have been scared off by all the newspaper and TV headlines warning of bankruptcy or worse for Ford, General Motors and Chrysler. After all, some might reason, who wants a car from a company headed for extinction?
"G.M. is not going out of business," Pike answers sharply. "I'm not worried about that. G.M. sells more cars than other car maker in the world."
Credit is a little tougher, but Pike says, "People can still get loans."
Danvers Ford owner Bill Guinee agrees, observing that the only people suffering are those who have fallen behind on loan payments and expect to get enough money to pay off the old loan and buy a new car. "In terms of people being able to borrow money there is plenty of opportunity."
At Stutz Volvo, owned by Ford, Schulze agrees. "The banks around here are very solid."
For his part, Schulze acknowledges that the economic downturn has begun to tell. Yet, while it's hurt new-car sales, at his shop the used-car business has actually increased.
More than any other factor, Schulze blames an out-of-touch corporate bureaucracy for much of the trouble in the car industry.
"They shouldn't be giving money to these whack-jobs," he said. Among the sins of American car company CEOs, he cites huge salaries — dwarfing those of more successful Japanese CEOs, for example; huge financial burdens imposed on dealerships and overproduction.
"For years," Schulze says, "dealers have not been able to run their businesses the way they want to run them."
Guinee has a different take, praising the rising quality of Ford vehicles. "We have the product. We're just waiting for the economy to improve."
According to some observers, expensive agreements with the United Auto Workers have hobbled Detroit's recovery — but Guinee believes that new labor agreements will eventually solve that problem.
"The UAW gave them concessions," he says.
Notwithstanding all the negative publicity for the American car companies, the slowdown is being felt in showrooms that feature foreign cars as well. Just not as much.
"It's a little slower," concedes J.J. Hoyt of Kelly Nissan in Beverly. "But we're doing a little better than the average."
Nissan is a Japanese company, though many foreign companies make or assemble their cars in the United States. Hoyt estimates that his business is off by "10 or 20 percent."
Like the American dealers on the North Shore, he is fighting back with rebates, incentives and special financing.
It is a sign of how determined local dealers are to draw customers. "I have to sell cars or I don't get paid," says Pike at Hillcrest. "We've been here for 24 years. We've weathered the storm. You just get through it. Sometimes you have to have people do a little bit more work. Sometimes you have to take one for the team a little bit."
Alan Burke can be reached at aburke@gloucestertimes.com.
