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'Necessity buyers' venture into quiet showrooms

THE AFTERMATH
America's collective mind was not on everyday business last week, which was painfully clear at auto dealerships. Traffic was way down, and the usual humor was absent. Automotive News reporters visited three dealerships - in Virginia, Michigan and California - to gauge the mood and outlook.

DETROIT - On Tuesday, Sept. 18, small-business owner Graham MacLeod was in Merollis Chevrolet in Eastpointe, Mich., buying a heavy-duty Chevrolet 2500 pickup.

MacLeod said his company, which sells wholesale precast concrete vaults, needs the truck for deliveries and snow removal. That motivated him to buy, despite warnings that the Sept. 11 terrorist attacks could send the economy into a tailspin.

"I have a business I have to maintain - I have to maintain my fleet," said MacLeod, whose company has 11 vehicles. "If I'm running around with a raggedy old truck, it doesn't project a good image."

MacLeod was the kind of buyer that came into Merollis last week, where sales were off about 25 percent, according to owner Bill Perkins.

"The people that are out here now are more necessity buyers," Perkins said. "The impulse buyers are not in the market right now."

Trading down

The other trend Perkins noticed was that of buyers trading down to less-expensive, more fuel-efficient vehicles, probably spurred by short-term panic about gasoline supply. Four buyers traded full-sized pickups for the entry-level S10, he said.

"The S10 had not been selling well," Perkins said. "Bam! Here go four of them out the door."

Perkins said he thinks the slump will be short-lived. He is continuing advertising at pre-crisis levels and plans no major changes in strategy or operations.

The single-line store sells 1,400 new vehicles and 500 used vehicles annually.

Salesman Mike Zembrzuski said he has had a bit of a slump, but no more than normal in a streaky business. Part of the reason for his slowdown, he said, is that he relies on humor and a light manner to build rapport - a difficult style to pull off since Sept. 11.

Some customers were visibly upset in the days after the attack, Zembrzuski said. It was tough to focus on selling at first, he added: "Yeah, it still is. Still is. But I have done this job for 16 years, so I create the effect of tunnel vision. I concentrate on my customer, and that's all I hear or see."

Stable staff

New-car sales manager Joseph LaBeau said Merollis has one asset: low sales staff turnover. Pointing at the staff roster on his office wall, LaBeau cites tenures mostly of more than 10 years - and LaBeau has been at the store for 31 years.

"Guys here have a good book of business," he said, and are working repeat customers.

LaBeau said past crises, such as the Persian Gulf War and oil embargos, were tougher in terms of showroom traffic.

Said LaBeau: "I've been through quite a bit in 31 years. I have seen it where nobody came through that door, and that is not the case now."

You can reach Dave Guilford at dguilford@crain.com

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