Go to the mobile version of this Web site.

Login | Contact Us | Site Map | Paid archives | Electronic edition | Subscription Questions | Extras

A sigh of relief from car dealers

Bush plan a step toward restoring some confidence

By James Paton, Rocky Mountain News (Contact)

Published December 20, 2008 at 12:05 a.m.

Text size  

More More Business

More stories »

Colorado car dealers expressed relief after the Bush administration announced a $17.4 billion rescue package for the troubled automakers, but the news out of Washington eases only part of their concerns.

"Most of us are in survival mode," said Mike Faricy, a Chrysler and Jeep dealer in Colorado Springs whose sales have dropped 30 percent this year.

Weaker consumer spending and tighter credit remain obstacles to turning business around.

"The biggest problem is a lack of consumer confidence," said Faricy, who runs the Faricy Boys Chrysler Jeep. "Until that comes back we are still going to struggle. This is one step toward restoring that confidence."

Many consumers have been unable to receive the financing they need to buy a car or have been afraid to get rejected, according to the dealers.

Dealers welcomed the government lifeline. A bankrupt automaker would scare away customers, they said. "We'll fly on a bankrupt airline," Faricy said, "but that isn't going to happen with an automobile."

The car businesses believe the emergency loans are better than the alternative, but not without problems. The automakers may be forced to cut their dealer networks as part of restructuring.

The number of stores is expected to continue falling anyway because of lower demand. Sales of new cars across the state are set to fall by up to 25 percent this year, according to Tim Jackson of the Colorado Automobile Dealers Association.

Taking action to prevent the collapse of the major automakers "assures dealers of a product," said Jeff Carlson, the president of Glenwood Springs Ford, Lincoln-Mercury who traveled to Washington last week with other Colorado car dealers to lobby lawmakers. "But we still need some stimulus, customers coming into our showrooms to buy cars and trucks."

Comments

  • December 20, 2008

    9:08 a.m.

    Suggest removal

    jbowen43 writes:

    The mainstream republicans nearly unanimously opposed these loans and would have gladly allowed the entire American auto industry to go bankrupt along with all the supporting businesses such as parts suppliers, mechanics, car dealers, and their staffs, etc. If you or a friend or loved one are a part of the American car industry or derive income or support from it and its workers then you should surely think twice before voting or supporting any republican who didn't wholeheartedly support making these loans.

  • December 22, 2008

    9:03 a.m.

    Suggest removal

    mmannino writes:

    jbowen43,

    There are good reasons to oppose this bailout. The majority of Americans opposed the bailouts so it is not just conservatives. This bailout is just kicking the can down the road. The Detroit auto makers have huge structural problems. The UAW compensation and low productivity are a major problems. This bailout does not address UAW compensation and low productivity. As I understand, the UAW made some promises about compensation but these promises can be changed after the new administration. The UAW pensions and retiree health care funds are insolvent. The pensions should be given to the PBGC and the benefits reduced. The dealer networks are bloated, partially because of state franchise laws. These dealers who you defend are major proponents of state franchise laws that drive up the costs of vehicles. I have no sympathy for the owners of these franchises. They have lobbied extensively to not permit auto makers to sell vehicles directly to the public.

    Bankruptcy would have forced everything on the table. Many other industries have gone through bankruptcy. The auto makers and UAW have seen these problems coming for many years. The sudden slowdown in sales has brought everyone to a perilous point. Unfortunately, the auto industry seems to be producing too many cars for the near term. The best remedy for the industry is bankruptcy of the most inefficient firms. However, no country including the US will permit bankruptcy and possible liquidation. The US auto makers are the weakest firms in the global auto industry, at least the US based part of these firms.

    We are now seeing the results of kicking the can down the road. The problems have been recognized for many years. The auto makers, UAW, and individual states did not make the necessary changes years ago so the problem has compounded today. Kicking the can down the road again will create future problems and not resolve today's problems.