Stephen Brodell, president of Anacostia Chrysler-Plymouth is a survivor.
Two other Chrysler-Plymouth car dealers in the Washington area closed up in the past year in the face of a nationwide slump in domestic car sales, but Brodell hung on through the political fight over the Chrysler bailout, gasoline lines, 20 percent interest rates.
"It's been a hard, aggressive situation. I'm here six days a week," Brodell said.
The beating taken by the U.S. auto industry over the past year has led to the bankruptcy and closure of dealerships across the nation. In the Washington area, five out of an estimated 150 dealerships have been lost this year, according to Gerald Murphy of the Auto Trade Association for the National Capital area.
Now Brodell and other Washington area car dealers have a moment to catch their breaths and prepare for the 1981 model year sales campaign, beginning in six weeks.
There is more to the fall sales campaign this year than banners and a smooth sales pitch offering the "Best Deal in Town on Your Used Car."
The long depression in auto sales has altered the attitudes of those who buy cars and those who sell them.
Chrysler Corp. is counting on a fast start for its new intermediate-sized K cars to avert a financial failure, while Ford Motor Co. hopes its new subcompact cars hold the key to recovery from its worst post-war slump.
And for the dealers handling the fast-selling Japanese imports, the 1981 model year may be the most critical since the mid-1970s, when the U.S. public discovered Toyotas, Datsuns and Hondas: If Chrysler and Ford do not recover, the political pressure to restrain Japanese imports is certain to be strong.
"We all want them to do well," said Clifford R. Cummings, manager of Tysons Toyota in Virginia, speaking of his American competitors. "I hope there's enough action for everybody."
Cummings can afford to be generous, his competitors say. His has been the top-selling Toyota agency in the Washington metropolitan area -- in April, with sky-high interest rates paralyzing car sales for most dealers, Cummings was in Augusta, Ga., buying 106 Toyotas from another dealer to fill up his own depleted stock.
Other importers are a bit more cautious. Steven Layne, marketing analyst for Volkswagen for the District, Maryland, Virginia, West Virginia and North carolina, commented, "It's going to be a heck of an interesting fall." He believes that for the first time, importers may be faced with effective competition from domestic manufacturers for the small car market.
"The domestic manufacturers have really not had any cars to compete with us," he said, "so there's going to be lots of competition which we haven't experienced in the past."
Even General Motors Corp., which rode through the 1980 auto sales recession in much better shape than its other U.S. competitors, is hoping for a rebound. In the Washington area, sales of all its models, except Buicks, were down during the first six months of this year, as compared to the same period last year.
This has been a year that most local dealers would like to forget. Most of them have seen profits squeezed and sales depressed by a crossfire of economic trouble. Interest rates soared, credit was scarce, the recession cut consumers' purchasing power and escalating energy prices made whole lines of big cars, wagons, vans and trucks obsolete.
Several importers suffered too, although much less than the domestic dealers who have been trying to sell bigger, less fuel-efficient cars than their foreign competitors.
The top selling domestic-made car in the District in the first half of this year was the subcompact Chevrolet Chevette, closely followed by the Olds Cutlass and the Ford Fairmont, according to registration data compiled by R. L. Polk & Co. Toyota maintained its lead on Datsun as the favorite imported line, although the gap narrowed this year. Outside the district, Toyota and Datsun were nearly neck and neck.
High interest rates, even more than recession, were blamed by many dealers for their troubles this year. One of the partners in the local American Service Center which sells Mercedes-Benz and Fiat commented that "tight money" rather than recession hit them this year. "If only the credit market would loosen up a little more," things would be easier said Derek Leggins, sales manager of Seidel, a local Chevrolet dealer.
High interest rates hit auto dealers in two ways. Sales are hurt because customers who cannot get credit cannot buy so many cars. But high interest rates also hit profits by raising dealers' costs. Floor plan loans are tied to the prime lending rate -- the interest rate at which banks lend money to their best corporate customers.
When this leaped to 20 percent in the spring, the cost of keeping inventories soared. John Pohanka, president of Pohanka Oldsmobile-GMC Inc., said that he was paying 21 percent interest in the spring -- a "staggering" rate, just at the time when inventories are seasonally high. He estimates that it costs him $100 a month just to keep a car on the floor.
Washington has been hit less severely by the national recession than other areas, commented Pohanka. Its solid foundation of government employment provides some insulation from the ups and downs in the national economy, he added.
Pohanka himself has gone against the trend. He has kept up his stocks despite their expense. He believes that this is a major reason for his success is keeping up his Oldsmobile sales, despite the drop nationally and locally.
For those who have survived the recession, there are still pitfalls ahead:
The energy crisis and high gas prices seem to have caused a fundamental switch to smaller cars. U.S. manufacturers say it will take several years to retool their plants to meet this change.
Interest rates are also likely to remain unusually high, even if they do not soaragain to their levels of the spring.
Inflation, which many dealers feel has made consumers much more cautious about laying out money for a car, is not exepected to die away, and may even worsen next year as the economy moves out of recession.
These factors have probably made buyers more critical and insistent on durability than they used to be.Frank Faraone, manager of the Washington office of public relations for General Motors, commented that as inflation has pushed auto prices higher and higher, many more customers now see them as a "big ticket item" even though the price tag on a car may not have risen more than other prices.
For the immediate future, many Washington dealers are optimistic. Most report a sales rebound in July, mirroring the definite signs of a pickup in national auto sales in the last few weeks. And many agreed with Layne of Volkswagen that "things really turned around" in July.
Cy Shelton, district manager for Volvo of America's Washington district, called the prospects for the fall "excellent" and remarked that the Washington dealers had had a "super" month in July. Barry Covington, of Covington Buick in Silver Spring, was a little more cautious and probably more typical of the local domestic dealers. He said he expected the fall to be "good but not great".
But Covington remarked: "The customer is confused about what to do. When the 1981 models come out, the question will be answered."
Even if sales rebound this year and next, dealers agreed that the past year has left permanent scars and changed their operations forever.
Dealers who were stuck with large inventories of full-sized cars that few customers wanted will be wary of rebuilding a large stock again, predicts William Klingler, a regional Chrysler sales executive. "They just can't afford to take the chance again. We're not going to force inventory on them either," he adds.
The exception will be Chrysler's new, intermediate-sized compacts, the Dodge Aries and Plymouth Reliant, which are expected to be in great demand by Chrysler dealers, he said.
Some import dealers, whose smaller cars have established popularity, are trying to get all the inventory they can, cinfident of selling it. "We have to be a lot more selective," Brodell said. One result of a smaller inventory will be fewer cars to entice the impulse buyer, he added. But he believes there will be fewer such buyers anyway. With new car prices starting in the $7,000 range, consumers are going to be more deliberate, he predicts.
"It is different now on the dealer end, says Murphy of the Auto Trade Association. If, as expected, consumers keep their cars longer before trading in and sales volumes decline, it will become more critical for dealers to hold onto customers' loyalty. And the key to that, he says, is repair service. "Customers are becoming more service-conscious," he adds, and dealerswill have to do the same.
"The Washington area is a tremendoulsy consumer-oriented market," says Toyota Cummings. "You can't snow the customers any more with the rah-rah sales pitch. Price is always going to be a factor, but everybody is pretty much in line." The difference, he says, will be performance, quality and service.
There has been a fair amount of "rah-rah" in the last few months as dealers tried to boost sales and clear out their 1980 models. Checks were sent through the mail to potential customers, urging them to attend tent sales where they could spendthe check on a new car at an already discounted price.
And Koons Ford advertised last week that they would give away 20 used cars to customers who bought new cars over the weekend.
But now, more than ever, quality sells cars, most dealers agree, and that leaves them more dependent than ever on the manufacturers -- because that is where quality begins.