Since January, Robert Walton had kept one eye on the bankruptcy drama unfolding at Chrysler and the other on the sticker price of a 2009 Town and Country van.
Walton, a nurse at a veterans hospital, said he was hoping the dealers' desperation to get rid of unsold inventory eventually would rise high enough to spur deep discounts that would bring the $43,000 vehicle within his reach.
That day came. After hearing that he qualified for rebates and incentives because of previous military service and for owning another Chrysler product, Walton plopped down a check and drove away from an Upper Marlboro dealership in a top-of-the-line cranberry Town and Country that cost him $34,755.
With historically weak sales and two of the Detroit Three having teetered for months on the brink of collapse, analysts said car buyers are getting some of the best discounts on record. And there's evidence the perks are working: U.S. auto sales increased 0.5 percent from April to May, boosting overall retail sales.
"I saved $9,000," said Walton, 47, of Laurel, who was still wearing black work scrubs from his midnight-to-8 a.m. shift at the hospital. "That's a steal, that's a good deal."
Still, he said, he pushed the envelope, trying to stretch the money he had saved up. "I tried to counteroffer $30,000. [The salesman] wouldn't go for it. He said, 'Man, I'm already losing money on it.' "
Automakers push incentives
Last month, according to the National Automobile Dealers Association (NADA), Chrysler sold 79,000 vehicles, 10,000 more than analysts had projected. General Motors sold 191,000, about 20,000 more than forecast. Despite the positive numbers, sales for the month are down significantly from a year ago -- 21 percent at Ford, 26 percent at GM and 45 percent at Chrysler. Sales at the German automakers dropped 21 percent and at the Asian brands are off 35 percent.
As a result, automakers are pushing more and more incentives. According to the automotive site Edmunds.com, buyers in May on average got $4,880 knocked off the sticker price, including $2,952 in incentives from manufacturers and $1,928 from dealers. May's incentives are topped only by March discounts, which reached an average of $5,003 per vehicle.
But the slow sales and discounts are taking a toll on dealers, which posted a net loss of $992 per vehicle during the first quarter of this year compared with a net loss of $128 per vehicle during the same period last year, according to NADA.
While buyers are getting "the deal of a lifetime, this is why you see so many dealerships closing," said Jesse Toprak, senior analyst at Edmunds.com. "They are making money on used cars and trying to ramp up business on parts and service."
For consumers, the window of opportunity to get the huge discounts is likely to close by the end of the summer, analysts said. The automakers have significantly cut production. Once the inventories are depleted, they won't need to offer incentives.
The challenge for the automakers, however, may be managing the expectations of buyers who are accustomed to receiving 50 to 70 percent discounts offered in the liquidation sales of such retailers as Circuit City, said Jeff Schuster, executive director of forecasting for J.D. Power and Associates.
Larry and Helen Neely of Frederick said their 2003 Mazda Tribute was in excellent condition, despite its 184,000 miles. Still, they wondered whether they could get a deal on a vehicle from a Germantown dealership losing its Chrysler franchise as part of the automaker's restructuring. They found themselves in the showroom of Montrose Dodge listening to a pitch by a salesman and two sales managers on why they should buy a new Charger sedan or Nitro sport-utility vehicle.
They could get a lifetime warranty on the powertrain. And they could get rebates ranging from $2,500 to 3,000, which combined with a trade-in would bring the price of either vehicle down slightly below $20,000.
"I saw in the news that dealers were offering $10,000 off," said Helen Neely, who is a school teacher in her late 50s. "I don't think [your offer] is very much."
Jordan Daberko, the salesman, told them the fire-sale reports referred to 2007 demos, which were gone.
After two hours, the Neelys left, saying they would sleep on it. That next day, Helen Neely said they opted to pass on the deal. "If they were drastically cutting the prices, then I would have been there," she said.
Affordable credit can be elusive
For other customers, obtaining affordable credit continues to be an obstacle. Tyrone and Tina Wolridge stopped into Ourisman Chevrolet in Marlow Heights, seeking better financing on an SUV than one offered at a nearby Ford dealership. Because their credit is bad, they said, they were told the Mercury Mountaineer they had their heart set on would cost them $700 a month -- about $300 more than they could afford.
"If you don't have excellent credit, they try to give you what they want to give you instead of what you want," said Tina Wolridge, 41, of Upper Marlboro.
At Sheehy Chrysler Jeep Dodge, where Walton had bought his vehicle, the sales slump has caused dramatic changes. Sales dropped to about 80 a month from about 300 a month at its peak about a decade ago, said Paul Sheehy, president of the dealership. Sheehy said he gave up his Chevrolet franchise in February, after annual sales at some 14 dealerships in the D.C-Maryland market fell from 19,000 in 1999 to 9,000 last year. A decade ago, the dealership sold twice as many new vehicles as used ones. Today, the scenario is reversed.
The dealership has six salespeople, down from 25 a few years ago.
Sheehy said most of the people buying cars are repeat Chrysler customers. It's been tough wooing buyers from the imports. "The customers who are not coming -- will they give us an opportunity?" he said.
Walton, who is single with no children, said he wanted a roomy vehicle to transport some of his siblings and their children on summer road trips to Texas and California.
He initially tried to pay for the van using his ATM card but was told he'd need a check. So he drove back to his apartment, double-checked his bank balance on his computer and headed back with his checkbook.
Walton wrote out the check for $34,755 and gave it to finance manager Jim Gantz, who reached out to shake his hand.
"Thank you," Walton said. "I hope you sell some more."
