High gas prices, green trend put used car dealerships in world of hurt

By SARA E. SARGENT-MEDILL NEWS SERVICE

It might seem like a major blow, but General Motor Corp.’s announcement today that it’s selling assets and cutting costs is only the latest chapter in the story of America’s car industry woes.

But while things look bad for companies dealing in new car sales, it’s nothing compared to those dealing in used cars. As crude oil futures hover at $138 a barrel and drivers continue trading in their SUVs for smaller, more fuel-efficient vehicles, Chicagoland used car dealerships are at an impasse. Saddled with older-model trucks and gas-guzzling sedans, dealers are finding it nearly impossible to get these cars off their lots.

“I’ve got a 2001 Tahoe some guy traded in for a Cobalt and I’ve had that Tahoe for 61 days,” said Dan Biegel, general manager of Skyway Chevrolet on the South Side. “Normally you like to keep stuff 30 to 60 days. I’ve had nobody in even to look at it and I’ve advertised it for really low prices.”

Business has been so bad lately that, as of July 31, Skyway is closing.

“It got bad when gas hit $4 a gallon,” Biegel continued. “I live in Indiana and come into Chicago every day, but we saw it first in Chicago and it was definitely the driving factor. The value of trucks or fuel inefficient cars–their wholesale value–has just dropped off.”

Robert Glowa, who has owned Glowa Auto Sales in Wicker Park for 44 years, speaks of a similar experience.

“It’s not only because of the non-fuel efficient cars but the economy too,” Glowa remarked. “Sales slowed down since the economy is the way it is. In the last 3 years, sales have gradually declined.”

Glowa, like Biegel, is also closing his doors. Because his dealership specializes in cars with more than 100,000 miles that sell for $5,000 or less, no one is interested in his product.

“My business is for sale,” he said. “I’m at the age where, after 44 years of doing it, I’m done. I’ll just keep 8 or 9 cars until I sell them, but I don’t even expect to sell the property because the real estate market is off. It’s coming down to where you’re losing your savings.”

Cars with hybrid electric or clean diesel engines, which are expected to account for 11 percent of U.S. auto sales by 2012, will not be available to used dealerships for some time. It can take anywhere from two to five years for new cars to cycle through to resale points. But by that time, it might be too late for many area dealers.

“A few drivers are looking for hybrid cars, but we don’t deal with those cars because they are too expensive,” reported Syed Mateen, owner of Asia Motor Inc. for the last 14 years. “Maybe in the next 5 years, but they aren’t available now. The hybrid dealerships have control on those hybrid cars and they are selling at more than the market value.”

Mateen, who buys General Motor Corp.’s Chevrolet Impala and Ford Motor Co.’s Crown Victoria models from police departments and sells them to cab companies, said such vehicles are the only options for taxi services who need cars to run 24 hours a day, seven days a week.

Although Mateen has not seen a drop-off in sales, he is nevertheless unable to raise prices because clients are unwilling to pay more money for these cars with gas costing what it does.

“They don’t have a lot of options even though they are crying,” he mused about cab drivers’ need for the large, sturdy “gas-drinking machines.”

And cry they will, at least until gas prices settle and hybrid cars become widely available for resale. But no one, not even those who have been in the car business for more than 40 years, has any idea exactly when that will be.

Tags: autos, cars, crude oil, dealerships, Energy, gas, General Motors, green energy, hybrids, used cars