Wednesday, November 3, 2010

Car sales reflect status of economy

Ford has record-breaking growth, but Blaine County sales flat

Express Staff Writer

Sawtooth Auto Sales General Manager Brad Toothman, sitting in a 2010 Ford F150, awaits customers with salesman Eric Opple, right. Photo by Willy Cook

Despite the fact that Ford Motor Co. made more money this third quarter than ever before in its history—earning $1.7 billion, 70 percent more than a year earlier—the Wood River Valley's Ford dealership hasn't seen correlating growth.

"I'll be right on my [sales] numbers from last year, maybe slightly higher," said Eric Opple, salesman at Ford dealer Sawtooth Auto Sales in Hailey.

Ford's sales across North America increased 18 percent last summer compared to 2009, but Sawtooth's numbers have not matched the pace. Dealership General Manager Brad Toothman said the local economy is likely to blame for the disparity.

He said area residents are hesitant to take on a contract for a new car if they question their financial security, something many people wandering onto the lot have admitted to.

"A lot of people come here and talk, obviously," Toothman said, "and it's crazy out there."

Instead, they hold onto their cars for longer than usual, something Opple said he's repeatedly seen from potential customers.

Nearly one out of every 10 Blaine County workers is jobless but looking for work, according to the Idaho Department of Labor's latest unemployment report, for September. The county's unemployment rate is the same as that of the nation as a whole. However, the nation's unemployment rate has slightly decreased in a year's time—dropping by 0.2 percent. Blaine County's job market has moved in the opposite, downward direction. The county has lost 330 jobs since September 2009, and the unemployment rate has increased by 0.6 percent.

"I think our business is directly related to how well people in the valley are doing," Toothman said.

The state Labor Department also reports that 280 workers have either left the county or just stopped looking for work over the past year.

"For us to see a great improvement ourselves, we need people in the valley," Toothman said. "We need this local economy to be good."

He said those who do buy cars are spending less, evident in the kind of cars bought. Toothman said the dealership's number of sales has kept a steady pace, but the ratio of new cars compared to used cars sold has decreased. He said that before 2008, the number of new and used cars was about even, but the dealership is now selling two used cars for every one new car.

However, Opple said Ford's improved reputation has benefited the dealership, especially the fact that Ford spurned government bailout money, unlike General Motors and Chrysler.

"I have a handful of clients that are diehard Chevy drivers," Opple said. "For 30 years, they would never consider a Ford. Not anymore."

He said these biases reversed when General Motors, Chevrolet's parent company, decided to shed much of its debt through a government-provided $49.5 billion rescue package. Ford, on the other hand, bore the weight of its huge debt, but now expects to end 2010 with as much cash as debt, a goal it didn't expect to hit until a year later. Ford's debt totals $22.8 billion, but it has built a cash reserve of $20.3 billion so far this year.

Despite taking a bailout, General Motors is also on the mend, which has translated to increased sales for Blaine County's only other new-car dealer, Wood River Motors in Hailey, which sells GM vehicles. General Motors has reported profits this year and is planning to buy back $2.1 billion of preferred stock from the U.S. Treasury, which took a majority stake in the company when it rescued GM.

Nate Kirk, general manager of Wood River Motors, said dealership sales are "tracking quite a bit better" than 2009, but are nowhere near pre-2008 numbers. He attributes increased business to people regaining confidence in the economy as the media reports on the country coming out of the recession.

Kirk also said General Motors' shift in thinking has raised its status. Rather than making some small cars for the United States and others for European and Asian markets, GM is now selling the same small cars across all markets and trying to shake the American mindset that small cars are economical, low-class cars. Point in case: the new model Chevy Cruze.

"After all the calculations are done, the 2011 Chevrolet Cruze should provide comfort and space and build quality never before seen in this segment at this price," said automotive reviewer

Kirk said several customers have walked into Wood River Motors looking for a Cruze. None are on the lot, but one is on its way.

"People keep coming in and asking, 'Where's it at? Where's it at?'" Kirk said.

He said he has a list of phone numbers to call when the Cruze arrives.

Toothman said it's the same story for Ford's Fiesta.

"People are always asking about it," he said, and a Fiesta is en route.

He said Ford is also trying to break the perception that small car means economical and bare bones. He said Ford is bringing the superior European version of its Focus to America this year.

"We definitely are seeing a few bright spots in an otherwise dark tunnel," said Sawtooth salesman Opple.

Trevon Milliard:

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