Ernest DeMarco was looking for just the right car as he cruised the rows of Chevys and Fords at the National Capital Area Auto Show late last month.

He knew what type of auto he wanted -- a full-size model, like a Chevy Caprice -- and how much money he wanted to spend, no more than $23,000.

But knowing isn't buying. For the last several months, all DeMarco has done is look. And look. And look.

If times don't get better, he said, he just might not buy any car at all.

"I'm very concerned about the economy," said DeMarco, a federal government employee who lives in Annandale. "We're in a recession, but ... it's like nobody's in charge."

And then there's the Persian Gulf crisis. "A lot depends on what happens over there before I decide to buy a car," said DeMarco, who attended the auto show at the Washington Convention Center.

The local auto market, paralyzed by fears about the economy and political conflict in the Middle East, is in a slump. The auto recession, if it can be called that, affects many more than just those who sell new cars. Consumer reluctance also has touched auto lending, auto repair, used-car sales and the repossession business.

Just as the decline in area housing sales reflects the impact of worker layoffs and declining consumer confidence, the drop in car sales mirrors the downbeat mood of many Washingtonians.

With the exception of automobile leasing, which appears to be up slightly, the figures all point in the same direction: down. Not only have new-car sales and tax collections from those sales fallen, but so have sales of used cars.

Automobile service also appears to be slowing, though repair shops are doing more big-ticket work, such as engine overhauls, to keep older cars running.

During the first half of 1990, the latest period for which figures are available for the region, 139,725 new cars and trucks were sold, down 5.9 percent from the same period in 1989. Other statistics and interviews with dealers, customers and lenders indicated the falloff intensified later in the year.

In Virginia, for instance, the number of vehicle titles issued last September was 11.5 percent lower than for the same month in 1989. New-car titles were down 25.1 percent, used-car titles down 6.6 percent.

In the District, excise-tax collections on vehicle transfers were 1.7 percent lower in fiscal 1990, which ended Sept. 30, than in fiscal 1989.

Officials at the Maryland Department of Motor Vehicles don't have figures as recent, but they said they are looking at a similar decline.

Detroit's auto executives said the Washington market has not been hit as hard as Boston and other East Coast cities where the declines have been steeper.

Still, the downturn here in the real estate and financial industries makes the region a sore spot. For the same period in which auto sales here dropped 6 percent, sales nationwide fell 4 percent.

Some Washington area car dealers said their sales were up or keeping pace with last year. But most of them also indicated that it is a good deal harder these days to sell cars. Consumers are more price-conscious and more prepared than they were when times were better.

"The difference is that people are asking more questions, which means that salespeople have to be better prepared to deal with them," said Ak Adeyinka, a salesman for College Park Motorcars. "Everybody coming through the doors of our dealership wants to know about value. They want to know what they are getting for their money."

That characterization fits Pierre and Patricia Aden, who have been shopping for a car since last August. The couple has pored over numerous consumer reports, visited many dealerships, talked with friends, monitored advertisements, watched television reports and read newspaper articles on cars and car companies.

After all this research, they have decided to replace their 1983 Honda Civic with a new Honda Accord EX with automatic transmission. And they have decided they don't want to pay more than $14,000. The manufacturer's suggested retail price for that Accord is $17,545. The dealer's invoice price -- the price the dealer paid the manufacturer for the car -- is $14,738.

"The market is soft and there is a lot of competition out there," Pierre Aden said. "I know I can find someone who will meet my price." If not, the Adens may be willing to pay a bit more. Or, they will look at another model, he said.

For banks, the trend for automobile lending is following the direction of auto sales. Many bankers and representatives of auto manufacturers' finance companies said loans have fallen roughly in proportion to the decline in sales. At best, auto-loan volume is flat.

"Consumers are more cautious. They know what their limits are," said John F. Collins, senior vice president for retail banking at Dominion Bank. "They may drive that car for six more months."

The timing of this caution is unfortunate. Many banks are trying to emphasize consumer lending for such items as autos, in an attempt to de-emphasize loans that have proved riskier.

"There's nothing in the world that any bank would rather have today than more consumer loans," said Peter Boyd, executive vice president for Richmond-based Crestar Bank. "It gets us away from the commercial real estate market."

The evidence from banks about auto loans is a bit ambiguous because more consumers are taking out home-equity loans.

Some of those loans -- there is no way to tell how many -- doubtless are being used to buy automobiles. But automobile finance companies, such as GMAC Corp. and Ford Motor Credit, also reported that they were issuing fewer auto loans.

Dealers and lenders said that, in addition to the economy's downturn, there is another reason for the decline in automobile sales. The five-year car loan, which became popular in the mid-1980s, has put many people who bought with such financing in a bind. Their car is several years old now and they would like to trade it in -- but the trade-in value is worth less than the amount still owed on the car.

There are no figures on how many people who otherwise would be buying a car are "upside down," in industry parlance. Michael Hart, Washington branch office manager of Ford Credit, said the phenomenon, along with the ailing economy, is leading to less-qualified prospective borrowers.

"The better qualified applicants aren't buying," he said. "Those people haven't reached that equity point. The prudent buyer is keeping his car until he gets some equity. It takes a lot of good buyers out of the market."

Credit problems also are sending cars back to dealers. Some dealers said their sales are above what they were last year at this time, but nationwide, at least, there also is a rise in returns, according to the McLean-based National Auto Dealers Association.

"Tighter consumer credit, higher required down payments and more customers being upside down all will contribute to rough times in the finance and insurance department" of many dealerships, the association said last month in a report on the national auto industry.

The report said repairs and maintenance will be the only "saving grace" for dealers this year. But locally, it is not at all clear service is doing well.

Early one snowy morning at Chevy Chase Chevyland in Bethesda, not one car was brought in for service from 7 a.m. to 8 a.m., traditionally a peak period. The weather was doubtless responsible in part, but assistant service manager Dennis Hoffer said service in general is running below the levels of last year.

More people are having major repair work done, spending $2,500 to $3,000 for a new engine, for instance, to keep cars running that they might otherwise trade in. But other customers are neglecting routine oil changes and tune-ups, probably for economic reasons, Hoffer said.

"If the car is broken and you don't have any money, you won't spend it," Hoffer said.

Hoffer, who is paid on commission, said he has sold off one of his three vehicles to save the cost of the monthly payment.

He is not the only one. More individuals in the Washington area appear to be selling cars. Transportation-category classified advertising lineage in The Washington Post in 1990 was 3.5 percent lower than in 1989. Within that category, the type of ads placed by individuals, as opposed to car dealers, was up 1.5 percent. Individuals account for nearly all of that category.

Dealers and others also are trying to sell used cars, though it appears that few are buying.

Greg Sutler, who runs Fredericksburg Auto Auction, one of the larger wholesale auctions in the area, said he used to sell about 90 percent of the 1,000 to 1,200 cars he offered at auction each week. Now, he sells 60 percent to 70 percent of the vehicles. Last week only 50 percent were sold.

"People are not buying the second car or the third car," Sutler said. "In many cases, a used car was a luxury rather than a necessity."

When it comes to buying cars in general, Washington area residents appear to be stuck in neutral. But many consumers appear to be thinking of leasing. Hart of Ford Credit said that Ford's leasing in the Washington area is up 50 percent over the previous year and more of those customers are leasing smaller, economical cars.

Some consumers who already have purchased cars are even failing to keep current on payments.

No delinquency figures are available for the region as a whole or for the District alone, and the figures for Virginia and Maryland only extend through the third quarter of last year. But those figures indicate a slight increase in delinquencies on loans made through dealers -- generally considered somewhat riskier than those made directly by banks to their own customers.

Dominion Bank, for one, has seen its delinquency rate on installment loans rise to 1.53 percent last month from 1.17 percent in December 1989. And some auto-auction houses report increases in repossessions.

"It used to be seasonal workers like construction" workers whose cars were repossessed after they failed to stay current on payments, said Melvin Richards, president of Colonial Auction Services Inc. in Wayson's Corner, Md.

"Now you are finding more and more it is regular government employees or county employees who are not making their car payments," he said. "The spectrum of who is losing their cars is widening."