President Jimmy Carter
White House D.C.
Because of current energy policy dictated by current administration I'm forced to lay off ten percent of my 100 employe force. When will you people see the light?
President Connell Chevrolet
By Jerry Knight
Washington Post Staff Writer
Costa Mesa, Calif., car dealer Pat Connell was outraged about energy when he fired off his mailgram to the White House earlier this month and his moodd hasn't improved much since then.
Neither has the car business in Southern California, where the gas lines have been the longest and car sales the worst in the nation.
Nationally auto sales were off 26 percent in mid-May, but at Connell Chevrolet things were twice that bad and there are more than 500 unsold cars on the lot. "Normally we sell 200 to 300 cars a month," said Connell's partner and general manager Paul Doddridge. "Right now we're selling about 50 percent of that."
Even half of normal sales is probably better than most car dealers are doing Harbor Boulevard, the main car-buying street in Orange County, the Los Angeles area's biggest bedroom community.
Between Balboa Beach and Disneyland, 15 miles away, there are more than two dozen dealers, import and domestic, new and used. On two recent afternoons auto salesmen stood around the showrooms in twos and threes, taking turns greeting the occasional customer who interrupted the coffee klatches.
"It hasn't been that slow," said a young salesman at Costa Mesa AMC-Jeep, "but I can tell you how many pieces of gravel are out there in that asphalt."
Four-wheel drive jeeps - with $12,000 price tags and 14 miles per gallon ratings - that customers had to wait months for earlier this year are parked by the dozen on dealers' lots in California. Dodge vans - once Chrysler Corp.'s bread and butter - are stacked up by the hundreds and Chrysler's sales nationally are off 33 percent.
The far greater slump in California has thrown the state's car business into a turmoil that could forecast what's ahead for the rest of the nation's auto dealers.
Big car prices have plummeted even faster than auto sales figures, while demand for subcompacts and diesels has pushed their prices as much as $2,000 above the window sticker.
(Despite gas lines second only to California's the Washington area has not experienced such a severe slump in auto sales. John Koons Jr., whose family owns 10 dealerships, estimated new car sales are off 10 to 15 percent and said used car sales are holding. Small cars sales are strong, he added, and shortages are not a problem here.)
California dealers said they have laid off salesmen and new car cleanup crews, cut back their advertising expenditures and slashed their orders for additional cars. The dominoes they set in motion could mean fewer jobs in Detroit, slimmer profits for newspapers and less business for all the places the unemployed automakers and sellers once spent their money.
"You cripple the auto business and you cripple the county," warned one California dealer.
California auto sales fell farther than in the rest of the country because of the gas lines that once stretched for nearly two miles past Pat Connell's Chevrolet showroom.
That was the day he fired off his wires to the president and several other elected officials. "It's a damn outrage," he fumed. "They've created absolute panic. It's time somebody did something about it."
Connell laid off 10 people and had to give his remaining salesmen a bigger salary to compensate for the lack of commission, the only income most car salesmen have.
"I used to be having four-car weekends, now I'm lucky to have one car all week." said 23-year-old Pontiac salesman Mike Mervish. Mervish said his monthly commission check has fall from nearly $4,000 to less than $1,000.
"We're starving," admitted Mervish's boss, Steven Green sales manager of Alan Magnon Pontiac, just down the road from Connell Chevrolet.
Even customers deciding the long lines at the pump are reason to trade in their old gas guzzlers aren't helping business, dealers said.
"The big car owner who want to trade for a subcompact is kidding himself," said John Felter, general manager of Theodore Robbins Ford. "We tell him to hang on to it, it's bound to be worth more than it is today."
Felter said a year-old Thunderbird will bring $3,000 to $3,200 at auction and most "heavy cars" are selling for up to $2,000 "in back of book" - the prices in the Kelly Blue Book, the standard industry used car price guide.
The Southern California car dealers said they not only can't sell big cars, they can't sell little ones either, but for different reasons - there Aren't enough to go around.
General Motors' dealers complained they were allocated only five cars each of GM's new X-body subcompact, the Chevrolet Citation, Pontiac Phoenix, Oldsmobile Omega and Buick Skylark.
Steven Green pulled two dozen signed orders fro the Pontiac Phoenix out of his desk drawer and Dodderidge daid, "I could sell a hundred Citations a month if I could get them."
The few X-cars on GM showroom floors in Orange County carried conspicuous little signs pasted beside the price sticker warning, "The manufacturer's suggested retail price is not necessarily indicative of the price at which dealers in this area have been selling this automobile."
"The sticker is only a suggested price," said one sales manager. "The real price is determined by supply and demand. Usually it's less (than the sticker price), but if people are willing to pay more, that's what the price is."
The biggest premiums are being charged by import dealers who in California are getting $2,000 or more above the sticker price for the most popular models from Honda, Mazda and Volkswagen.
While consumers complain that charging more than list price for cars is akin to gouging at the gas pump, dealers see it differently.
"I only get 30 or 40 cars a month, and I've got a big 'nut' to cover in this store," said Patrick Reilly, general manager of Garden Grove Volkswagen.
Reilly said he is paying other VW dealers $500 more than their invoice price for gasoline powered Rabbits in order to get more cars than he allocated by the factory.
His diesel Rabbit quota from VW is only three cars a month, although that should rise later this year when VW begins installing diesel engines in the Rabbits manufactured at its Pennsylvania plant.
"Diesels? I'm buying 79's (from other dealers) from$8,000 to $9,000 and selling them for $9,800, maybe $10,000," the Rabit dealership manager said. "You'll see them in the paper for $11,000, maybe more, but I'd be embarassed to charge that much." CAPTION: Picture, Pat Connell with his overstock of new cars at Connell Chevrolet in Costa Mesa, Calif. UPI