Are Seattle Car Dealers Getting Desperate?

Category: News. Written by Grant 

“I got my Civic at $100 over invoice!” beams Leonard L., a Redmond resident who picked up a new 2009 Honda Civic earlier this year. Leonard is among the growing group of recent car buyers who have snagged up great deals as local Seattle car dealerships have begun feeling the economic recession.

Ever since late last year, car dealers throughout the nation have been feeling the squeeze. The Big Three carmakers, GM, Ford and Chrysler, constantly made the evening news with the need for a multi-billiion dollar bailout package. Even consistently performing brands like Honda and Toyota saw sales of their veritable Accord and Camary lines slowly dropping.

Toyota, the world’s biggest automaker, announced yesterday that March sales were likely to be even worse than January and February, which had set records for 27 year-lows in car sales. Honda also announced that it would be delaying one of their new factories in Japan due to the low demand. Consumer research firm J.D. Powers came out and said that retail sales for new vehicles dropped 40 percent in the first half of March compared to last year.

The Northwest – and specifically, the Puget Sound region – was optimistically thought to be resistant to the national downturn in the economy. Up until earlier this year, big local employers like Boeing and Microsoft were still getting brisk business and powering the local business engine. However, with recent layoffs, pay cuts and hiring freezes and falling real estate prices, it would appear that the Seattle region is inevitably tied to the national – and global – economy as a whole.

Seattle car dealers have been caught up in the mess, as almost every dealer has seen sales figures fall – with the odd exception of Subaru, which has actually increased in sales. Ancedotal reports have been coming in from everywhere of novice but persistent negotiators coming away with great deals on new cars. Bothell resident David P. tells us that he walked onto a lot and was offered invoice pricing on a new, loaded 2009 Toyota FJ Cruiser, which included the $3,000 manufacturer rebate at the time.

First hand accounts like these from Leonard and David are eye-opening in the world of car dealers, namely because the industry has had the notorious reputation of fleecing customers at every possible opportunity. Now that local car salesmen are willing to offer up select inventory for nothing more than holdback on the front side, it is quite indicative of not only competition among dealers, but also the urgency of closing with a buyer. Only twelve months ago, short of using an auto buyer or being an expert car negotiator, would it be possible to have a car delivered in invoice pricing.

Does this mean that Seattle dealers are getting desperate? Yes and no. While overall sales are certainly down, dealers are still selling inventory and obviously making money on the sale – whether it be limited to holdback or some number magic on the financing side. Smart shoppers that do even a minimal amount of shopping around will generally find reasonable pricing on the vehicle they’re looking for. Certain makes and models are still in high demand or limited supply, so not all dealerships are looking to unload their inventory to the first buyer that comes by. In addition, not all consumers are born negotiators, so it’s fair to assume many buyers are paying more than they might be able to get away with.

The overall sentiment of the local car industry is hopeful, but restrained. If you talk to most car salesmen, they’ll be optimistic and tell you things aren’t as great as last year, but still fine. Behind that optimism though, is a sea of worries of what the next few months will have in stock for the auto industry.

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