There are as many opinions as styles and colors of autos on the road, but isn’t that pretty much what you’d expect when asking luxury car dealers what the economy is doing to their baby, their brand?
“It’s not just the luxury end; the auto industry as a whole is off right now,” says McDermott Hummer’s Steve Zimmerman. “We’re trying everything we can to get customers in here and try to make them happy,” the salesman says. McDermott’s advertising focus hasn’t changed, but Zimmerman claims he finds himself really focusing on making the customer happy and giving him/her the best possible deal.
“You don’t change strategy; you stay the same as you were,” says Zimmerman. “It’s all about them wanting to come in. With all of the financial analysts on TV telling people not to spend money, it’s scaring them away.”
For the Hummer line it’s different strokes for different folks. “The person who is buying the H2 [invoice price $52,438, according to AOL Autos] is not worried about spending money or the economy. Most of the people are buying it as an extra car. They don’t care about the gas. They can afford it, but H3 invoiced at $28,300 to $36,200 is a different story,” he says. The H3 buyer might be buying any other SUV. “Whether they are going to buy an H3, a Ford Explorer, the Nissan Pathfinder - they’re still in the same price range and get the same gas mileage. It’s more about, ‘Do I need an SUV, and if so which one is going to give me the best deal?’”
Zimmerman says times are as bad as he’s ever seen them in his five years in the business. So, he goes the extra mile - literally. For example, he gave his car to a customer in Weston when he took the customer’s car in for service. “It’s something I’ve always been doing, but in a market like this people appreciate it more.”
“Nothing is going to change until we get a new President in office. Everyone’s scared of the war and the economy. They’re too worried to spend too much money right now.”
In an atmosphere of financial anxiety, middle-class consumers are holding onto their cars a lot longer, Zimmerman finds, but the wealthy don’t necessarily do the same. “For the luxury cars Lexus, Mercedes and Porsche that person doesn’t care,” he says. The big car dealer has noticed that many are buying smaller cars such as the Toyota Prius, a Honda or Nissan. “People are going for small cars. They believe in the Japanese for some reason.”
The pain is far from universal. David Columb, sales consultant with Mercedes-Benz of Fairfield, describes business as “phenomenal.” Columb says he averages delivering 14 cars a month but delivered 25 in April.
“The manufacturers are offering better deals, Columb explains. “They’re pulling clients out of their leases prematurely, getting them into new cars, and they have low rates. It’s a combination of all of that. People still have to drive cars. It just makes it more advantageous to do something.”
His location, he acknowledges, could make a difference. “The income level is different. Fairfield County is sealed in somewhat” from recessionary pressures.
Columb has been selling Mercedes-Benzes in Connecticut for 29 years. The worst years were 1989 through 1991, he says.
“Lessons from history: We didn’t have proper model selection and programs out to attract the buyers,” he recalls. “It’s a matter of offering a good product and a decent deal.”
Client advisor Marc Landry crows that BMW of North Haven “just came off of a record breaking month last month, with the highest gross profit per unit the dealership ever did and very high in the volume as well.” He maintains that “All the hoopla in the media is just hoopla.”
Landry says that the economy does not impact sales. He attributes the happy situation to a couple of factors. “First, we lease probably 75 percent of the BMWs” that leave the lot. “Because of that, people are probably forced to buy a car after three years. The people who leased three years ago are needing another car. In addition to that market, BMW has come out with new models which are helping things.”
Landry says his dealership strives to illustrate the product’s value to the customer. “Especially when you’re leasing, you’re paying for the depreciation,” he explains. “When you have a car that depreciates very slowly, your payments are less. Even though you’re buying an expensive car, you’re making payments that are pretty comfortable.”
Keith Neelens, a sales consultant at Porsche Audi of Wallingford, also faults the media: “Things are excellent,” he says. “To be honest, the media blows how bad the economy is out of proportion.”
Neelens says the ratio of customers leasing to paying cash for the cars is “the same as it always has been.” The salesperson says business has never been tough in his five years on the job.
But Murray Mendro, a sales consultant with McDermott Lexus of New Haven, acknowledges that “The economy certainly has an impact - no question.” Nevertheless, he says, sales for April 2008 exceeded the same period a year ago. “We’re not breaking world records, but we’re doing okay,” he says.
Mendro attributes some of the good fortune to “quite a few repeat customers and referrals.” Plus, he says, “There’s all kinds of neat new stuff going on including getting into the sporty performance-end of business.” He cites in particular the IS F (base MSRP $56,000). “That’s getting a lot of attention,” he notes. “And Lexus is getting into all-wheel-drive vehicles, which are doing well for us. And they’ve changed the style. This has been received very well.”
Leasing has become more and more popular in the upper-end market. “There are some really nice lease programs and incentives,” says Mendro. “Lexus doesn’t do those 2.9’s percent annual financing, but many people do lease Lexus vehicles.”
Moreover, the psychology of leasing has changed. Once upon a time people thought leasing was glorified renting of a car. Now, more understand the reasons to lease. “It’s become a good way to get into a vehicle,” says Mendro. “You can take less money out of your pocket and drive a really nice vehicle.” In addition, “Usually, when you lease a car, you’re going to get out of it before it’s out of warranty. The people who are going to get in and out of cars every two or three years, they realize it’s not a bad way to go.”
When times are tight, customers become more deliberate and weigh their options more carefully. “They’re going to look at how they pay for it and what they buy,” Mendro explains. Mendro, who has been selling for four years after a 20 year leave from the business, says he can’t recall a time when selling cars hasn’t been challenging. What’s different is that “There are more people you’re not going to sell to than you used to - because people are really going to check things out and uncover every possibility.”
“Am I making money like I was before?” asks Mendro rhetorically. “No. But we’re still selling cars and making a living.”
