Orlando-area car dealers hurting, hopeful amid economic woes

NOTE: THE OPTIMISIM IS STARTING TO SHOW. DEALERS SEEM MORE POSITIVE HERE THAN THEY HAVE BEEN IN 6 MONTHS.=DP

OrlandoSentinel.com
Orlando-area car dealers hurting, hopeful amid economic woes
By Steven Cole Smith
Sentinel Automotive Editor
April 12, 2009
For Don Mealey and other Central Florida auto dealers, it’s all about what Mealey calls “adjusting to the new reality.”

“You are not going to sell 150 new cars a month,” said Mealey, who owns Mealey Chevrolet in Clermont. “You might not sell a hundred. You might sell 50. But hopefully, with the right people, and the right emphasis on used cars and on parts and service, you can still make it work.”

With General Motors and Chrysler on the brink of financial collapse, Mealey and his competitors know that the major change is coming. Some Central Florida dealerships will merge, and others will disappear altogether as the car companies pare their product lines.

Mealey stands by his decision eight months ago to take over the old Bill Seidle Chevrolet dealership in Clermont — though he’s troubled by what has happened to his industry.

“We closed the deal on August 28. September, things were still OK. October — it was like somebody pulled the plug,” he said. “When the history of 2008 and 2009 is written, it will say that Don Mealey Chevrolet opened just before the economy just fell off the Earth.”

In the first three months of 2009, total U.S. sales for GM dropped 48.8 percent over the same period in 2008. Chrysler sales were down 45.5 percent. Other manufacturers haven’t fared much better: Ford sales were down 44.4 percent, Toyota was down 37.1 percent and Honda was down 34.5 percent.

The Mealey family has other area dealerships that include Mitsubishi and Mazda franchises, plus several motorcycle dealerships. Don Mealey heads a group of investors that owns dealerships in South Carolina that sell Chrysler, Jeep, Dodge, Hyundai, Jaguar, Land Rover, Infiniti, Mazda, Nissan and Porsche vehicles.

All brands, he said, are feeling the pain.

Central Florida, Mealey said, “is paying the price for being totally overheated two or three years ago. Housing was overpriced, and it’s going to take awhile to get those homes properly priced and properly mortgaged before things get better.”

There are, said some Central Florida dealers, some positive indicators.

“I think we’ve bottomed out,” said Mike Smith, owner of Orlando Dodge-Chrysler-Jeep. “The banks have money to lend, and I think we’re on the upswing.”

The sales mix is still dependent on gas prices, Smith said. With gas near $2 a gallon, larger, more powerful cars and trucks are selling, “and the gas-sippers are just sitting on the lot.”

Smith views the pending Chrysler merger with Italian manufacturer Fiat as a positive.

Since Chrysler has fewer model lines — Chrysler, Dodge and Jeep — there is not much to cut. But at General Motors, with Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, Saab and Saturn, there’s a fear among dealers that not all brands will continue under the GM banner, if at all.

GM is trying to sell Saab and Hummer, and Saturn’s future is unclear. Saturn’s products are shared by other GM brands, and selling Saturn would likely mean that, in part, the new Saturn would have to find products elsewhere, perhaps from China or India.

George Nahas, owner of Saturn of the Lakes in Tavares, has been through this before. When GM discontinued Oldsmobile, he converted his dealership to Saturn.

“All the talk from GM about dropping Saturn has hurt, there’s no question about that,” Nahas said. “It’s a damaged brand. And yes, business has fallen off, despite the fact that we have some great products to sell.”

Regardless of what happens to Saturn, Nahas said, he is convinced that, as with Oldsmobile, warranties will be honored and service will be available.

Still, it would not surprise Nahas if GM was forced into bankruptcy. “I’m not sure they can avoid it,” he said.

So how did the car companies get into this situation? Local dealers point to two central problems: On a national level, loans were made to customers who couldn’t afford the payments, often to cover the payoff on a current vehicle.

In Central Florida, the slowdown in construction has crippled dealers, too. Companies with fleets of vehicles aren’t replacing them, said Kevin Mealey, Don’s son. “They are just driving what they have.”

And those customers who depend on the construction industry for their income aren’t buying new vehicles, either.

So what will happen?

“I’m the eternal optimist,” Don Mealey said. “You have to be to work in this business.”

He said there are just as many people as before who need to travel, and they’ll need transportation.

“Maybe every car they buy won’t be new, or maybe instead of three cars in the family, they’ll have two,” he said. “But if yours is the last dealership standing, you’ll do all right.”

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