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07-14-2008, 04:15 AM
Auto Dealers Add Own Sales Incentives, Deepening Their Losses on Trucks, SUVs
By SHARON TERLEP and JEFF BENNETT
July 14, 2008; Page B1
Detroit
Some car dealers are reaching deep into their own pockets to extend auto makers' already hefty rebates and other incentives to sell pickup trucks and sports-utility vehicles.
In some parts of the country, additional dealer discounts have cut prices of pickups and SUVs to 50% of the vehicle's original sticker prices. At Zangara Dodge in Albuquerque, N.M., a 2008 Dodge Ram pickup now sells for $15,000, down from a sticker price of about $30,000.
![[Image: MK-AQ624_CARSAL_20080713151031.jpg]](http://s.wsj.net/public/resources/images/MK-AQ624_CARSAL_20080713151031.jpg)
Chrysler LLC
A 2008 Dodge Ram sells for half the sticker price in Albuquerque, N.M.
Dealers on average more than doubled their net loss to $136 on every vehicle they sold during the first four months of 2008, compared with $61 a year ago, said Paul Taylor, chief economist for the National Automobile Dealers Association. The stats don't take into account May, June and July, where dealers were squeezed even more.
After trending downward for the last few years, sales of pickups and SUVs began falling at a much steeper rate as gasoline prices hit $4 a gallon this spring, leaving bloated inventories on dealer lots. The problem has forced the Big Three auto makers, Toyota Motor Corp. and Nissan Motor Co. to slash truck production and return to offering fat incentives in hopes of spurring sales.
Ford Motor Co., for example, is now offering its F-150 pickup at the preferred prices it usually gives only to its employees.
In Charlotte, N.C., customers at Independence Hummer can get up to $11,000 off a 2008 Hummer H2 and $10,000 off a smaller H3. The deals essentially wipe out any profit the dealership would make on the vehicles, said salesman Karl Logan.
The intensifying economic pressure is sure to lead more dealers to consider closing.
Ford, GM and Chrysler are running programs aimed at reducing their dealership network by weeding out underperforming sites while bolstering profitability potential for those who remain. The auto makers are kicking in cash to help dealers buy out one another or exit the business.
Chrysler has been the most aggressive as it looks to have more of its dealers offer all three brands -- Chrysler, Dodge and Jeep -- under one roof.
The discounts are hurting manufacturers' margins, too. Full-size trucks are generally the most lucrative models Ford, General Motors Corp. and Chrysler LLC offer.
By SHARON TERLEP and JEFF BENNETT
July 14, 2008; Page B1
Detroit
Some car dealers are reaching deep into their own pockets to extend auto makers' already hefty rebates and other incentives to sell pickup trucks and sports-utility vehicles.
In some parts of the country, additional dealer discounts have cut prices of pickups and SUVs to 50% of the vehicle's original sticker prices. At Zangara Dodge in Albuquerque, N.M., a 2008 Dodge Ram pickup now sells for $15,000, down from a sticker price of about $30,000.
Chrysler LLC
A 2008 Dodge Ram sells for half the sticker price in Albuquerque, N.M.
Dealers on average more than doubled their net loss to $136 on every vehicle they sold during the first four months of 2008, compared with $61 a year ago, said Paul Taylor, chief economist for the National Automobile Dealers Association. The stats don't take into account May, June and July, where dealers were squeezed even more.
After trending downward for the last few years, sales of pickups and SUVs began falling at a much steeper rate as gasoline prices hit $4 a gallon this spring, leaving bloated inventories on dealer lots. The problem has forced the Big Three auto makers, Toyota Motor Corp. and Nissan Motor Co. to slash truck production and return to offering fat incentives in hopes of spurring sales.
Ford Motor Co., for example, is now offering its F-150 pickup at the preferred prices it usually gives only to its employees.
In Charlotte, N.C., customers at Independence Hummer can get up to $11,000 off a 2008 Hummer H2 and $10,000 off a smaller H3. The deals essentially wipe out any profit the dealership would make on the vehicles, said salesman Karl Logan.
The intensifying economic pressure is sure to lead more dealers to consider closing.
Ford, GM and Chrysler are running programs aimed at reducing their dealership network by weeding out underperforming sites while bolstering profitability potential for those who remain. The auto makers are kicking in cash to help dealers buy out one another or exit the business.
Chrysler has been the most aggressive as it looks to have more of its dealers offer all three brands -- Chrysler, Dodge and Jeep -- under one roof.
The discounts are hurting manufacturers' margins, too. Full-size trucks are generally the most lucrative models Ford, General Motors Corp. and Chrysler LLC offer.
Chris
981 GT4
996 GT3 Cup
911 Carrera Sport Coupe
PCA Nationally Trained DE Instructor #200810247
Genesee Valley BMW CCA Instructor
981 GT4
996 GT3 Cup
911 Carrera Sport Coupe
PCA Nationally Trained DE Instructor #200810247
Genesee Valley BMW CCA Instructor
