The Wall Street Journal reports that some car dealers are reaching into their own pockets to extend auto makers' hefty rebates and other incentives to sell pickup trucks and sport-utility vehicles.
In some parts of the country, additional dealer discounts have cut prices of pickups and SUVs to 50 percent of the vehicle's original sticker prices.
Dealers on average more than doubled their net loss to $136 on every vehicle they sold during the first four months of 2008, compared with $61 a year ago, according to Paul Taylor, chief economist for the National Automobile Dealers Association.
After trending downward for the last few years, sales of pickups and SUVs began falling at a much steeper rate as gasoline prices hit $4 a gallon this spring. The problem has forced the Big Three auto makers, Toyota, and Nissan to slash truck production and return to offering fat incentives.
The intensifying economic pressure is sure to lead more dealers to consider closing. Ford, General Motors and Chrysler are running programs aimed at reducing their dealership networks by weeding out underperforming sites while bolstering profitability potential for those who remain. The Journal says auto makers are kicking in cash to help dealers buy out one another or exit the business.
– By Ed Coury, senior editor and Midwest bureau chief for the Wall Street Journal Radio Network, Dow Jones & Co., and a reporter for WWJ Newsradio 950. Portions of this report were published in the Wall Street Journal.
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