Rapid City mostly bucks nationwide car sales slump

By Jeremy Fugleberg, Journal staff | Wednesday, November 12, 2008

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It's been quiet lately on many car lots around Rapid City. Believe it or not, that's almost good news. It could be far worse.

Across the nation, buyers are staying away from car lots, and that means dealers are feeling the bite as potential buyers close their wallets. A dealer industry association says 590 car dealers closed so far in 2008, with hundreds more expected to shut down by year's end.

Car makers, slammed by the slump in sales, are slashing expected profits. October car sales fell 32 percent from the same month last year.

But like many salespeople at car lots in the city, Courtesy Subaru Sales Manager Darek Bray says local sales are down but far from out.

"Not earth-shatteringly down, like the nation is," he said. "All we can do is keep plugging."

Car sales plummet

The National Automobile Dealers Association in October said 590 dealers shut down this year, with another 700 expected to close before the end of the year. In 2007, 430 dealers shut their doors.

Car-maker sales were down 32 percent in October compared to the same month last year. Domestic manufacturers were hit especially hard by October's low sales numbers. Ford's numbers were down 29 percent and General Motors sales dropped by 45 percent to the lowest number of cars sold in a month since 1975.

Friday brought another round of bad news for car makers. Both Ford and General Motors said their sales continue to drop, and both are spending more cash than they're taking in. To save money, Ford says it will cut 10 percent of its salaried North American work force. Toyota announced Thursday it was slashing its expected profits by 63 percent due to plummeting demand. Domestic manufacturers are pushing for a bailout similar to the federal government's recent rescue of Wall Street.

No local dealers closing

While the national news is bleak, cars dealers around the city report mixed sales results. While some say things are slower than usual, others say November sales are picking up and some say sales are sharply down. None of the dealers contacted said they were considering closing their doors.

"We're just fine," said Terrry Hillman, sales manager at Rushmore Honda. "But we're not having a huge month, we're not blowing the doors off."

He said SUVs are regaining popularity. Sales of the gas-guzzlers slumped as gas prices climbed past $4 a gallon.

"I think SUVs are starting to come back," he said. "I don't think it's an issue of gas anymore, and winter's coming."

He said South Dakota often bucks the drastic trends in other areas of the country.

"I don't think South Dakota has near the gloom and doom projections in the papers and the national media," he said.

"Our business in October was off just a hair, but our business in November is going gangbusters," said Larry Kuhn, used car sales manager at Rapid Chevrolet Cadillac.

Financing is still available, although other dealers have seen some lenders back away as credit conditions tightened.

"It's been OK here," he said. "This area doesn't seem to have the low lows and high highs."

The story is a bit different at Great Western Auto Brokers, which sells Suzukis and Mitsubishis. Finance manager Stacey Hovland estimated sales had slipped 30 percent to 40 percent recently, and some of the financing options have disappeared.

"There's still plenty of lenders available," she said. "Of course, a couple of them have shut the doors."

Buffeted by fuel prices and a slowing economy, shoppers are increasingly interested in cars that will save them money if they are interested in buying cars at all.

"Everybody's just looking for economy, they're really big into fuel-savers," she said. "Everybody's scared to buy right now. The whole nation is nervous."

Bray, sales manager at Courtesy Subaru, said his dealership has lost some financing options, but financing has been less of a problem for his customers, who are looking for imports Bray provides.

"It hasn't really affected us, because the people we get who come in are pretty well-qualified," he said. "We're doing OK. It's like any retail business, we could always be busier."

Reach Jeremy Fugleberg at 394-8421 or Jeremy.fugleberg@rapidcityjournal.com.