Washington auto dealers see sales pick up

V ince Sheehy can recall his disappointment in having to close his Chrysler-Jeep-Dodge   dealership in Upper Marlboro in 2009. At the time, it had been more than 30 years since  Fairfax-based Sheehy Auto Stores shuttered a location because of slumping sales.

But closing  the store was just the half of it.

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Sluggish demand left Sheehy saddled with excess inventory of trucks that took six months to clear off the lots, which meant high carrying costs. The company also laid off more than 50 employees across its network of 14 dealerships in the Washington area. And the remaining staff took pay cuts to ensure no one else would lose their job.

“It was a brutal period,” he said. “We’ve always done a nice job in servicing vehicles, and that carried us through the tough times.”

Business started turning around in 2010, but really took off last year as Sheehy tracked a 12 percent increase in annual sales. In the past year, the company has added four dealerships, including an Infiniti auto store in Annapolis and a Lincoln dealership in Gaithersburg.

“We’re going to be smart about it, but our expectation is for some steady growth because we’re big believers in the D.C. market,” Sheehy said. “There’s huge pent-up demand.”

Sheehy is among a number of local auto dealers enjoying a resurgence in sales, as the U.S. auto industry, once on the brink of collapse, bounces back.

About 12.7 million vehicles sold in the United Sales in 2011, the highest volume in sales since 2008, according to Wards Auto, an industry research firm. The industry rang up roughly $817 billion in total sales, a 9.9 percent increase over the prior year, according to Census Bureau data. Analysts are forecasting 14 million vehicles will sell this year, not quite returning to the pre-recession high of 17 million.

Since auto sales data is not broken out by region, it’s unclear how much local dealers earned as a whole last year. However, Gerard Murphy, president of the Washington Area New Automobile Dealers Association, says many of his members surpassed the national sales growth average of 10 percent.

“Washington’s car market has always been a cut above the nation because of the presence of the federal government and the cottage industries that service it. That’s a very stable workforce,” said Murphy, whose organization is sponsoring the 2012 Washington Auto Show, which is running through Sunday.

Dealerships in the area indeed fared better than the rest of the nation in terms of the number of closings throughout the downturn. The local dealership count dipped 8 percent to 258 in the past four years, whereas nationwide it slid 15 percent to 17,767, according to automotive consulting firm Urban Science.

Consolidation of dealerships contributed to the sales growth of the remaining players in the market, said Steven Brooks, an analyst at Edmunds.com, an auto industry site. Dealers around the country, he pointed out, also benefited from an increased availability of auto financing. And low interest rates made financing options attractive to consumers.