A buyer's market at D.C. area car dealerships

By Dana Hedgpeth
Washington Post Staff Writer
Saturday, February 27, 2010; A11

The winds have been blowing, the roads are full of salt, and two fierce congressional hearings this week raised more questions than they answered about automotive safety, auto experts say. Looks like a good time to buy a car.

February has been a miserable month for local auto dealers. Snowstorms forced many to shut their doors on what should have been busy weekend days. The Toyota Motor Corp. has recalled about 7 million vehicles over safety problems -- the subject of the congressional hearings -- and the economy has not exactly encouraged customers to buy cars, either.

So dealers are turning on the salesmanship -- and offering incentives.

Depending on the region, Toyota is offering up to $1,500 off or zero percent financing on certain models. And rivals -- including Chevrolet, Chrysler, GMC, Ford and Hyundai -- are responding, offering up to $1,000 in some cases to persuade drivers to trade in their Toyotas and buy a different brand in what some consumer magazines have nicknamed a "Toyota conquest" campaign.

Toyota's market share dropped from 18.3 percent in December to 14.2 percent in January, according to J.D. Power, which said the rate of decline is starting to slow.

"I definitely do think that it is a good time for a consumer looking to buy," said George Augustaitis, market analyst for CSM Auto, an auto forecasting firm. "There's deals from GM, Ford and Chrysler as they're trying to entice the Toyota buyer. They're trying to capture some of the market share.

"If you were looking to buy a new Toyota, you have a lot of manufacturers that are trying to entice you with rebates to get you to come over and buy their cars, or at least to try them. It is enough to get someone who's driving a Toyota . . . to test drive a Malibu, maybe, or at least drive some dealership traffic when we're in a generically slow month."

Many dealers are hoping -- and expecting -- that the incentives will continue into the spring as Toyota works to fix vehicles recalled for acceleration and brake troubles.

Remy Faures, 36, of Silver Spring was in the Darcars Toyota store in Silver Spring this week, thinking about buying a Toyota Sienna minivan for his wife and three children. He was undaunted by the recalls and hoping to get a good price.

"I hope that the dealers are under pressure so they may be inclined to give me a better deal," he said.

Faures said he wasn't worried about buying a Toyota.

"I'm not giving them a blank check, because they made mistakes," he said, "but the odds are so slim of me getting into an accident over one of these recall issues."

Other dealers are hoping they'll get customers looking for trade-ins.

"Are we having a good month? Not particularly," said Jack Taylor, who has owned a Toyota dealership in Alexandria for 37 years.

He said his sales are off by 50 cars a month this year, compared with last year. "Between the snow, plus it's already down with the recession, and now this," he said, referring to the Toyota recalls. "And it's February, which is never a great month in the car business."

An Annapolis dealership said that in the past week and a half, it has taken in more than a dozen Toyota and Lexus trade-ins from customers who bought Volvos, Subarus and Hyundais.

"It's been good to us," Patrick Wergin, vice president of Annapolis Cars Inc., said of the Toyota recalls. Some of his Toyota trade-in customers said they didn't feel comfortable in their cars, given the recalls. Others said they were lured by the incentives.

His February sales were up 10 percent, in part because of the Toyota trade-ins. "It is an opportunity for other automakers," Wergin said.

In the past, he said, customers typically would tell his sales teams: "We've had Toyota. We want to go back to Toyota."

"They'd shop you to see what's out there, but they'd go back to Toyota," he said. "But now that's being tainted with the recall. They're open to change."

The recalls have caused some Toyota owners to worry about resale value, which has generally been high for the brand. Some auto industry experts say the recalls could put that in jeopardy.

According to Kelley Blue Book, Toyota vehicles involved in the recalls have dropped, on average, about 3 percent in resale value since the recalls began. And 22 law firms in 16 states, including Maryland, North Carolina, Georgia and New York, have filed a lawsuit against Toyota alleging that customers' vehicles are worth less because of the recalls.

Not all dealers say Toyotas are losing value. At Darcars Toyota, managers said they are seeing price increases of $500 to $1,000 on some Toyota models that they buy at online auctions. There is a reduced supply, they said, because some dealers stopped selling models that were being recalled.

Vince Sheehy, president of Sheehy Auto Stores, has six dealerships in the Washington area that sell a range of brands, including Ford, Nissan, Subaru, Honda, Mazada and Hyundai. His Ford store in Springfield took in four Toyotas as trade-ins over the weekend.

"It's going to be a dogfight out there," he said. "It's a really good time for consumers to look at a car because whatever Toyota does, everyone else is going to respond."

View all comments that have been posted about this article.

© 2010 The Washington Post Company