SALES BELOW '69 LEVEL—DEALERS EXPECT UPTURN AFTER STRIKE

Florida Automotive Journal
December 1970

New auto sales are somewhat lower than a year ago, and floor traffic is down in dealer showrooms.  But dealers and manufacturers believe that the General Motors strike is responsible almost entirely for the slowdown in sales.  They feel that when the strike ends, consumer interest in new cars will be rekindled, and this will be reflected in a upturn in sales.

Auto dealers feel that a lot of hard work may have to be done to bring consumers back to their showrooms in satisfactory numbers when the strike ends.  Owing to the shortage of new 1971 models in the hands of the dealers, General Motors has cut down sharply on its advertising, and at least one other major manufacturer has similarly curtailed its promotional efforts, to await the end of the strike.  In the past, the post - strike period has been marked by a resurgence of consumer demand, and auto industry leaders feel that this will happen again.

Dealers who are feeling the pinch, however, hope that the strike won't last too long.  Stocks of new 1970 and 1971 model cars in the hands of GM dealers are dwindling and other dealers would like to see more floor traffic and heavier order bookings.

General Motors is counting on strong consumer loyalty to enable it to stage a strong recovery in sales, when the strike ends.  In the past, auto strikes have usually resulted in a heavy carryover of business into the following year.

Since credit is easing and the administration is forecasting an upturn in business, automobile men believe that 1971 will bring a substantial increase in production and sales.  The present strike, which began Sept. 14, has already resulted in the loss of around 300,000 cars for the 1970 production total, it is believed.

"The floor traffic that is coming in are real buyers, not lookers.  Eighty to 85 per cent of those coming in are buyers.  Normally, it's 50 percent lookers and 50 per cent buyers.  We've got cars in stock, but we may not have the particular car model or color a customer wants.  We're taking a good many orders for future delivery, but that's off 25 per cent also.  All the new cars we sell now will get preference in delivery.  When production starts up, we'll be able to make delivery in three or four weeks."

The strike through its effect on the economy, has had an impact not only on GM dealers, but on dealers selling other makes of cars.  Some consumers, uncertain over the duration of the strike, appear to feel that they will do better if they wait for a resumption of production by GM and the return of a more active economy.

In the New Orleans area, Star Chrysler's sales manager, Frank Lanson, said there were many potential buyers.

"We cannot say we have gained by the strike," Mr. Lanson said.  "The higher price tags on the bigger cars have made economy car buyers out of a lot of people.  Our compact models have been well received."

Sales resistance was also noted by Reinhart Motors, an American Motors dealer in Montgomery, Ala.  R. P. Burke, executive vice president of Reinhart, said many potential customers were waiting to see what General Motors is going to do before they buy.

In the Chicago area, the UAW strike against General Motors has reduced floor traffic.  It has also curtailed the buying of GM cars, but it hasn't increased business for dealers of nonstruck companies.

Z.S. Frank, president of Z. Frank, Inc., a large Chevrolet dealer on the North Side of Chicago said sales are off 30 to 40 per cent, and the number of visitors to his showroom has declined.

"We're getting down in inventory of the new 1971's," Mr. Frank said, "But, without any question of a doubt, we have enough cars for the balance of this month.

"You can say all of us are suffering from the strike."  Mr. Burke said.  "It is difficult to say how much our sales are off, but the drop has been substantial among all dealers."

In Chicago, John J. Mucha, sales manager for a Ford dealership, the downtown Litsinger Motor Co., said the GM strike "hasn't helped us and hasn't hurt us."  He said that, if the GM strike continued, "people who are working for manufacturers that supply GM won't be able to buy a car because they will be afraid they will be laid off."

Mel Wolff, president of a Chrysler - Plymouth - Imperial agency bearing his name in Chicago, said, "We anticipated a few extra sales with GM shut Down.  We're not getting any extra sales.  We're not ahead at all.  In fact, we're running 1 per cent down."  He noted that conditions were better on the North Side of Chicago than on the South Side, where the steel mills are located.

"A lot of steelworkers have been laid off," he said.

In Houston, a large Ford dealer, Don McMillan, reported that fleet sales were up, but there was little improvement in sales generally because of the GM strike.

General Motors dealers in Houston said the pinch for new models was approaching but others said they had so many cars on hand that they could not set a time limit on when they would be sold out.

A major Chevrolet dealer in the Midwest said his sales were off sharply.  He said he has had to lay off 20 per cent of his sales, mechanical and clerical staff.

He added that the Chevrolet Vega, the new minicar, was "very hot," and noted that buyers are interested in compacts.

Larry Faul, Jr., vice president of Larry Faul Oldsmobile Co. in the Chicago area, said the strike had cut sales and floor traffic by 30 per cent.

"We're writing orders," he said, "but business is just fair.  There is very little objection to the price increase which is 4 to 5 per cent.  I look for a good season once the strike is over."

A spokesman for Canal Ford, a New Orleans dealer, said used car sales were moving well and prices were firm, but the strike was having a little impact on new car sales.

A.L. Whiteman, merchandise manager, Ford Division of the Ford Marketing Corp., said:

"The strength of the market for little cars is exceptional.  The state of the economy at this point, coupled with the outlook for the consumer, could not have provided a better platform for launching cars like our Pinto.

"Although it's too early for any definitive trend, Pinto looks as if it is doing precisely what we wanted.  It's bringing new people into the Ford owner body."  Out on the West Coast, for example, our early research among Pinto buyers shows that more than a fourth have disposed of an import car, and about 40 per cent said that if there had been no Pinto they would have bought an import.  In the Los Angeles market, the figures were even higher.  But not everybody is "thinking small.  The big Ford is off to an extremely good start."