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Car dealers are desperate. Does that make it a good time to buy a vehicle online?

Russ Mitchell, Los Angeles Times on

Published in Automotive News

New-car showrooms are closed. Inventory is beyond bloated. Car dealers are bleeding cash and ready to negotiate.

In other words, if you're blessed with good health and you have a reasonable chance of keeping your job, now's a good time to buy a car.

You'll have to shop from home -- or wherever you're sheltering in place. You'll need to be adept at online shopping and ready to negotiate price by email or phone. But negotiating power in favor of the buyer has rarely been so lopsided.

The rules facing car dealerships vary from one state, city or county to another. Some localities are allowing showrooms to stay open. Others have shut everything down. No sales, including online sales, are allowed in the city of Los Angeles, but they are generally allowed in L.A. County and the rest of California.

"Dealers are desperate to generate revenue," said Sheldon Sandler, who runs a car-dealer consulting service in Princeton, N.J. "You can expect extremely good deals from anyone who can deliver you a car."

How desperate? "This is a cash-flow business. Make no mistake, the economic impact (on dealers) is severe," said Brian Maas, president of the California New Car Dealers Association. "If you rely on selling 10 cars a day, and you're selling one or zero, that's $350,000 a day."

 

There are about 16,700 car dealers in the U.S. All are hurting.

AutoNation, the country's largest chain of car dealerships, recently laid off 7,000 workers and said it would delay $50 million in capital spending. Penske Corp., which runs another large dealer chain, said it would furlough an unidentified number of workers and delay $150 million of capital investment.

"This is shades of 2008-2009," Peter Welch, president of the National Automobile Dealers Association, told Automotive News. "Only it seems this will have a much greater impact."

Chad Kelman, general manager at Community Chevrolet in Burbank, Calif., summarized the situation succinctly in a phone interview: "Business is s--- right now, and the deals are smokin' good."

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