Auto dealers fastening their seat belts
Even as the Big Three auto manufacturers GM, Ford and Chrysler received a $25 billion bailout from the federal government this week, local car dealers have taken a hit.
On Wednesday,[url=http://www.louboutinsit@#$%&/]louboutin[/url], a struggling Los Gatos Chevrolet suddenly closed. A Sunnyvale dealership shuttered last month.
Auto broker Robert Hammer of Hammer Auto in Palo Alto is feeling the pinch.
"My business is way off," he said. "Some people are off by 50 percent; I'm probably off 25 percent."
But he considers himself fortunate. Many of his customers earn between $200,000 and $2 million a year, making them "recession proof."
"Their portfolio might be hit,[url=http://www.babylisspro.us@#$%&/]babyliss[/url], but that's not really going to affect their monthly income,[url=http://www.polo-ralphlaurenoutlet.us@#$%&/]polo @#$%& outlet[/url]," said Hammer, who has been a broker for 21 years.
Despite the gloomy climate, Vu feels lucky as well. Toyota's overall market share has gone up, aided by sales of hybrids.
"Oh, we have a waiting list. We are taking deposits," he said.
Still,[url=http://www.prom-weddingdresses@#$%&/]evening dresses[/url], the volume of local car sales overall has been sliding since fall 2007, hastened by the skyrocketing cost of gasoline,[url=http://www.marcjacobshandbagsoutlet.net/]marc jacobs[/url], Vu said. His dealership sells about 180 new and 60 used cars a month, which is about 24 percent off from last year.
Dealerships focusing on SUVs and trucks,[url=http://www.nikeairhuarache.co.uk/]@#$%& huaraches[/url], including many American brands,[url=http://www.longchamphandbags-outlet@#$%&/]longchamp[/url], have had it worse, he said.
"Gas prices are not cheap. People are cutting back where they can,[url=http://www.moncler-outlet.it/]moncler outlet[/url]," Vu said.
That also includes waiting longer before having a car serviced and driving a harder bargain in the sales office.
More people are searching for deals, Hammer said.
Vu's sales staff has found customers more demanding.
"Because they know sales are off,[url=http://www.burberryoutletonlinei@#$%&/]burberry handbags[/url], they ask for a bigger discount than usual and more for their trade ins," he said.
Market conditions don't necessarily favor buyers, though,[url=http://www.sac-lancelpascher.fr/]lancel[/url], as banks have tightened up on loan approvals, dealers said.
People with credit scores of 650 to 690 what Hammer considers "borderline" will need to provide larger down payments and probably need a co signer, he said. About 80 percent of sales he arranges with dealerships are financed by loans or leases.
Banks are requiring would be customers to meet all of the conditions of the loan upfront, such as proof of income and residency, according to Vu.
"Before, they were loose. Since January they've tightened up," he said. Magnussen's sales include about 40 percent that are financed and 60 percent paid in cash.
Previously, even if a customer didn't have all the proper documentation on hand, the loan would be approved and the dealer would submit the missing paperwork to the bank afterward.
Hammer said that a few shady dealerships used to use that laxness as a sales tactic,[url=http://www.oakleyit.eu/]oakley[/url], allowing an unqualified buyer to drive off with the car. Then, 10 days later, the dealer would call the customer saying the bank wouldn't buy the loan, thus forcing the buyer to either put more money down, get a co signer or give the car back.
That trick isn't going to work in the current climate, Hammer said. With a higher likelihood that the bank will reject the loan application, "dealers will be afraid . they aren't actually going to get the car bought."
Even when loans are approved, the amounts are not as high as they used to be, Vu said.
A person buying a $20,[url=http://www.toms-outlets.us/]toms outlet[/url],000 auto used to be able to get more than 100 percent of that amount advanced, he said. Now, banks will only loan up to 80 percent,[url=http://www.louboutin--pascher.fr/]louboutin @#$%&[/url], even to people with strong credit ratings.
Not every dealership is worried, though. At Carlsen Audi of Palo Alto, business has been steady,[url=http://www.cheapnfljersey-outlet@#$%&/]hockey jerseys[/url], according to general manager Ron Burton. The dealership sells about 40 to 45 cars a month, he said,[url=http://www.sacburberry-pascher.fr/]burberry @#$%&[/url], which parallels sales before the dot com collapse.

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