It was wet and cold, the kind of day car dealers generally hate. But along the Washington area's auto rows yesterday, many dealers were smiling.
Lured by steeper than ever Presidents' Day discounts, area residents braved the weather and recession and actually went out shopping for cars and trucks.
"This is so nice!" said Karen Radley, owner of an Acura dealership in Woodbridge. "After so many months of slow sales, we're having one of the best weekends ever."
Radley and her husband, Vincent, own four dealerships in Northern Virginia, including a Honda and Chevrolet shop.
From Saturday until 4 p.m. yesterday, her stores sold 42 cars, most of them new.
"It was like a good weekend a year ago," said Radley, remembering when sales were relatively strong.
Still, few Washington area dealers are ready to declare that the recession in consumer spending has bottomed out or that the auto industry's hard times are nearing an end.
New-car sales in the D.C. area, down every year since 1985 and off another 6 percent in 1990, have yet to show any hard evidence of a sustained recovery. For dealers, there is also the matter of profit margins, which are taking a beating in the current economic environment.
With lots full of cars to sell, dealers are being forced to lower prices and throw in options to sell any new car. And the new cars that are selling tend to be smaller, lower-profit models.
Raymond and Mary Steinbart, with two of their five children in tow yesterday, were representative of many customers now showing up in the area auto market.
The Steinbarts bought a new Geo Metro for $7,000 -- list price -- from JKJ Chevrolet on Route 7 in Vienna. The purchase price included a $500 trade-in allowance for the Steinbart's patched-up, 180,000-mile, faded green 1979 Datsun wagon.
JKJ paid $6,251.40 for the Geo, according to dealers' invoice figures provided by the Automobile Invoice Service of San Jose, Calif.
Assuming that the dealership can recoup the $500 it allowed for the battered Datsun, JKJ stands to realize a gross profit of about $750 from the deal. Dealer incentives, which are private manufacturer-to-dealer price breaks, might boost that gross take.
But the likelihood is that, after paying the sales commission and other expenses, JKJ will be lucky to clear $200 from the sale, according to a number of industry experts.
None of that mattered to the Steinbarts. For months, the couple had been agonizing over whether to put more money into their faltering Datsun or to go out and buy a new car that could be used as a commuter car for Raymond, a captain in the U.S. Army Reserves.
They bought -- one of 45 people who did at JKJ over the three-day holiday. That was about average for a weekend in better times, according to Dave Heaslip, JKJ's sales manager.
Barbara Freeman and her daughter, Maegan, were also shopping small yesterday. The Freemans were looking for a car priced under $10,000 to replace their aging Nissan Sentra.
They were interested in purchasing a used 1991 Geo, a so-called "program car" with 5,783 miles on the odometer.
Program cars -- the name for vehicles inherited after use by rental car companies for six months or less -- have become hot sellers in an otherwise cold auto market.
Technically, program-car sales are counted as used-car sales, even though dealers frequently market them as "like-new" vehicles, or "demonstrators." And because of program cars, used-car sales now represent 27 percent of the average dealership earnings, according to the trade journal Auto Age, up from 7 percent in 1985 when program-car arrangements were virtually nonexistent.
Dealers like the program cars because they can be bought -- and sold -- at prices 20 percent to 25 percent below the identical brand-new models they get from manufacturers.
And these days, that 20 percent difference is often the difference between a sale and no sale, according to JKJ's Heaslip.
"We are selling a lot of those cars," Heaslip said. "We're also selling leftover '90s."
What Heaslip is not getting, he said, are customers "coming in ordering cars, saying: 'I want this color or that color.' They are buying right out of inventory."
Customers buying off the lot is good news for dealers but not so good for manufacturers, who are having a hard time moving the cars out of their own storage lots.
Even Toyota Motor Corp. yesterday was forced to announce it would cut exports to the United States in February and March by 10,000 vehicles because of sluggish sales. It saw a 13 percent decline in U.S. sales last month compared with a year ago.
And last week, the struggling Chrysler Corp. took the extraordinary step of shutting down all of its U.S. car plants to allow vehicle demand to catch up with supply.
According to Ward's Automotive Reports, an industry trade journal, U.S. automakers now have a 91-day supply of new cars in an industry where a 60- to 65-day supply is regarded as normal.
Still, car dealers are a naturally optimistic bunch.
Any good news, such as the surprisingly healthy flow of customers this holiday weekend, is enough to perk them up.
"The people who are walking through our doors are buying," said Doug Morse, sales manager at Brown's Volvo & Subaru of Alexandria, who said he sold a respectable but not spectacular 24 vehicles over the weekend.
"Our profit margins are down, because we have to give more on sales than we gave before. But they're buying -- 50 percent new and 50 percent used -- and that makes me optimistic," Morse said.