Car Deals Abound With Drop In Demand The recession has sapped demand for cars. Overall vehicle sales were down 37 percent in March from the same period last year. Despite prices for many vehicles that are lower than they've been for years, customers have not rushed into showrooms.
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Car Deals Abound With Drop In Demand

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Car Deals Abound With Drop In Demand

Car Deals Abound With Drop In Demand

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This is ALL THINGS CONSIDERED from NPR News. I'm Robert Siegel.


And I'm Michele Norris. The recession has sapped demand for all kinds of goods, including cars. And that means now may be a good time to think about buying one. People who follow the business say prices for many vehicles are lower than they've been in years. As NPR's Frank Langfitt reports, that is yet to send customers stampeding to the showrooms.

FRANK LANGFITT: I'm standing here in the parking lot of Ourisman Chevrolet. It's just outside of Washington D.C. And like a lot of dealers in the country right now, this one is doing whatever it can just to get customers to come in and look at vehicles.

Mr. ABBAS KHADEMI (General Manager, Ourisman Chevrolet): I'm Abbas Khademi. I'm the general manager at Ourisman Chevrolet in Marlow Heights, Maryland. This is probably one of the best times, you know, to get a deal on a new vehicle.

LANGFITT: So dazzle me.

(Soundbite of laughter)

Mr. KHADEMI: Well, the Chevy Cobalt, which is basically a subcompact vehicle, I mean, right now we have those on sale for $8,900.

LANGFITT: We're standing in front of a black two-door coupe with a spoiler on the back.

Mr. KHADEMI: This one here, and this price is $15,000.

LANGFITT: How do you get from 15,000 as your MSRP, your kind of sticker price to $8,900?

Mr. KHADEMI: General Motors has some rebates, you know, some bonus cash, they call it. There's all different kind of programs. And to be honest, which for us right now, we're just trying to sell some cars.

LANGFITT: So are most dealers these days. Jessica Caldwell is an analyst for, the consumer car Web site.

Mr. JESSICA CALDWELL (Analyst, There are just an incredible amount of deals. And the thing that's crazy is that it doesn't matter what vehicle you're looking for or what brand you're looking for, we're seeing even finance deals for Bentleys.

LANGFITT: Those offers haven't turned around the market yet. Last month overall sales were down 37 percent from the year before. Dealers say the problem is not so much financing, as consumer anxiety. And that's pushing dealers to cut prices even on popular vehicles. That's what Abbas, the manager of Ourisman Chevy, is doing with the redesigned Malibu, the sleek sedan won 2008 North American Car of the Year.

Mr. KHADEMI: Two years ago we were not even barely discounting the car. But this car here lists for $22,355. We have those on sale right now for $14,300.

LANGFITT: There is a small catch: To get that price, you have to trade in a vehicle that isn't made by GM. Otherwise, you have to pay an extra grand. Abbas admits he's losing money on deals like this. His strategy, make it up in his service bays.

Mr. KHADEMI: We sell the new car, you come back, you use our service department. And then when you need another car for your family, for your neighbor, for your friends, for your parents, you can recommend us.

LANGFITT: In fact, despite what you might think, dealerships don't make their big money on new car sales.

When you look at your profits, what percentage come from service, and parts and repairs?

Mr. KHADEMI: I would say probably 75 percent of our profits…


Mr. KHADEMI: …come from our service and parts operation.

LANGFITT: But first, Abbas has to sell those new cars. Some of the prices aren't as low as people expect. Nelson White teaches pre-K at a local school. He has a second child on the way. And he's here today hunting for a new SUV.

Mr. NELSON WHITE (Teacher): Well, yeah, I heard on the news that it was a good time to buy right now. So we're trying to maximize that moment.

LANGFITT: White's eyeing a Chevy Traverse, a crossover. He hopes to spend as little as $25,000.

Mr. WHITE: It offers a lot and it has a lot of space in it. It's like right around 30,000, so…

LANGFITT: Trying to strike you as a good deal?

Mr. WHITE: It's a okay deal. It's not as sweet as I thought it would be, but it's okay.

(Soundbite of phone ringing)

LANGFITT: That's the telephone inside the showroom. It doesn't ring much these days. Salesmen spend most of their time pacing the floor with their hands stuffed in their pockets. Henry Marin handles finance. He says one reason more people aren't buying is because they want to see if GM will collapse and prices fall even further.

Mr. HENRY MARIN (Finance Handler): You know, they're waiting for the bankruptcy and see what's going to happen. Basically we try to tell them that it's not going to be tied within as a small business going bankrupt and they have to sell everything at a - you know, 50 percent, or 60 or 70 percent off.

LANGFITT: Fortunately for the dealership, there's still customers like Carl Little Jr. He's a plumber who drives a five-year-old Chevy Silverado pickup. With extras, he thinks he can get a new one for as little as $22,000.

Mr. CARL LITTLE Jr. (Plumber): I think they'll work a deal with me. They said they're gonna work with me. So I think I'll be able to work something out, you know.

LANGFITT: But dealers will have to work out a lot more sales with customers like Carl Little if they hope to turn around the auto market.

Frank Langfitt NPR News, Washington.

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