SAN FRANCISCO -- Nearly 25,000 auto dealers, including 400 dealership owners and representatives from Maryland, Virginia and the District of Columbia, are meeting here this week to pressure car makers to hold the line on vehicle prices.
Higher auto prices are pushing down sales and, in 1988, could end a three-year trend in which total annual U.S. car and truck sales topped the 15 million-unit mark, according to dealers attending the 71st annual meeting of the National Automobile Dealers Association.
Dealers of Japanese and European vehicles are particularly concerned because prices of their cars have been affected by the weaker dollar, which makes U.S. imports more expensive.
Japanese auto prices. for example, rose 26 percent between the summer of 1985 and the end of 1987, adding an average $3,200 to the cost of Japanese cars sold in the United States. Japanese car prices are expected to rise 8 percent in 1988, adding about $800 to some car prices.
Prices on luxury European models are going even higher in 1988, with jumps of as much as $1,000 expected on some models.
"Our sales look like they're going to be down 15 percent from last year," said Don Beyer, president of Don Beyer Volvo in Fairfax. "Our new-car sales have been slow. But our service business is shooting through the roof, up 50 percent over last year this time."
American car makers have been running in the price derby, too, boosting their sticker prices an average of $2,200 between the summer of 1985 and the end of 1987. But U.S. auto makers have often covered their tracks with myriad sales-incentive campaigns -- rebates and low-interest finance rates.
Those sales-incentive campaigns will continues in 1988. But this time the Japanese and Europeans will join the Americans in the promotions.
"It would be nice if they would all just go out and cut their prices, period," said Nat Shulman, owner of Best Chevrolet in Hingham, Mass. "The slow-sales problem is a matter of price credibility. There's very little price credibility on these cars."
General Motors Corp. Chairman Roger B. Smith attempted to allay dealers' fears by announcing a freeze on GM prices for the remainder of the 1988 model year, which ends in October. The announcement in a keynote address to the NADA meeting on Saturday drew cheers and whistles from many of GM's 10,000 dealers attending the convention.
The news should help maintain relatively good GM sales in the Washington metropolitan area, said John Ourisman, president of Ourisman Chevrolet in Marlow Heights, Md.
Rebates and other programs have helped to keep Chevrolet sales going, and a growing buyer resistance to rising Japanese vehicle prices has also brought new customers to his Chevrolet showroom, Ourisman said.
Healthy local sales of the Chevrolet Nova are indicative of what's happening in the Washington market, Ourisman said. The subcompact Nova is built by GM and Toyota Motor Corp. through a joint-venture company, New United Motor Manufacturing Inc. in Fremont, Calif. National sales of the car, a remake of the Toyota Corolla, fell from 169,000 units in 1985 to 131,000 last year and are expected to fall to 110,000 in 1988.
"But the Nova is the best-selling Chevrolet in the Washington area," Ourisman said. The car usually can be bought for hundreds of dollars less than the comparable Corolla sedan, a fact that Washington area Chevrolet dealers have been emphasizing to consumers, Ourisman said.
But the Washington area European auto dealers aren't faring as well, according to dealers attending the NADA convention.
Higher prices are playing a major role in lowering sales. But Beyer, of Don Beyer Volvo in Fairfax, said that he believes the stock market crash on Oct. 19 also is affecting buyer behavior.
"Some of our buyers took a hit" on Wall Street, he said. "And some of those who didn't take a hit may be a little bit nervous. They'd rather repair their car and hold onto it a while longer until they see what happens."
Volvo, Porsche, BMW and other European car dealers said that pricing and sales will be the main topics of their conversations with manufacturers in NADA "make meetings" -- where dealers and auto makers get together to discuss marketing strategies and other issues.
But at least one of those meetings, the one for the dealers of the South Korean-made Hyundai subcompact car, will be filled with more joy than argument.
Hyundai sales are skyrocketing in the United States, rising from 162,882 cars sold in the United States in 1986 to 263,000 last year. An 18 percent increase in sales is expected in 1988.
The biggest Hyundai dealer in the Washington area, Fairfax Hyundai of Fairfax owned by Steve Horvath, sold 2,039 cars last year.
"The people who are buying the BMWs and so forth are the people who are pulling in their horns, but the Hyundai buyer is really chugging along," said Don Reilly, vice president and general operating manager of Fairfax Hyundai.
A combination of "price and quality" are selling Hyundai cars, which currently start at $5,395 for the base Excel model, even after a $100 price increase this year, Reilly said.
But Hyundai Motor Co.'s prices may get it into trouble with the federal government.
U.S. auto makers are planning to ask the Department of Commerce to bring dumping charges against Hyundai and several Japanese car companies, which they alleged are pricing vehicles far below production costs.
The Canadian government last year found Hyundai guilty of underpricing its Excel by 37 percent, but that finding is under review.
Reilly said that the dumping charges are ironic in a market where dealers consumers are complaining about high prices.
"We're simply giving people what they want -- a good car for a good price -- and our sales numbers indicate that people are responding to that," Reilly said.
In other developments here, a Maryland and Virginia dealer received Time Magazine Quality Dealer awards, the highest dealer-performance citations given at the NADA convention.
The Maryland recipient is Barry T. Covington, president of Covington Buick-GMC Inc. in Silver Spring; and the Virginia honoree is H.E. Derrick Jr., president of Lexington Motor Sales in Lexington, Va.