U.S. auto dealers to confront troubled manufacturers at Vegas convention

Friday, Feb. 2, 2001 | 11:11 a.m.

Strong sales

Americans bought new vehicles in January as though the economy were booming and layoffs were far from their minds, surprising and even mystifying auto executives worried about plunging consumer confidence and an economy that has slowed almost to a standstill.

Automakers sold cars, vans, sport utility vehicles and pickup trucks at a seasonally adjusted annual rate of 17.2 million vehicles in January, far better than the pace of 15.4 million vehicles set in December. The auto industry considers anything above 16 million to be a strong month.

Sales were down 6 percent from those in the month a year earlier, when the industry was enjoying an extraordinary boom. For all of last year, automakers sold 17.4 million cars and light trucks, their best year ever by a wide margin.

Events shaking the auto industry will take center stage in Las Vegas this weekend as the nation's car dealers have face-to-face meetings with manufacturers at a major convention.

About 30,000 people will attend the National Automobile Dealers Association convention, which runs Saturday through Tuesday at the Las Vegas Convention Center. It's closed to the public.

The dealers rotate their annual show among four cities with facilities large enough to accommodate them -- New Orleans; San Francisco; Orlando, Fla.; and Las Vegas.

Mike Morrissey, a spokesman for NADA, said the show sites aren't on a regular rotation schedule and the association will next return to Las Vegas in 2004.

"I think Las Vegas is our members' favorite city because of the entertainment," Morrissey said. "About half our members are dealer principals or own the dealerships and are generally pretty affluent, so I'd say the high-end restaurants are bound to do pretty well while this group is in town."

Kevin Bagger of the Las Vegas Convention and Visitors Authority says the agency doesn't account for potentially different spending patterns by convention delegates and NADA is expected to have a $38.2 million nongaming economic impact on the city.

But the real impact may be in the fireworks that come from some of the dealer meetings scheduled during the convention and the resulting media coverage within the automotive industry.

Twenty-seven different car manufacturers will conduct meetings with their dealers Sunday and Monday.

The most controversial of those meetings will involve General Motors, which plans a special invitation-only session with its Oldsmobile dealers, and Chrysler, which announced this week that it plans to cut millions of dollars in advertising and showroom subsidies in a bid to trim its losses.

The eyes of Detroit will be on Las Vegas when Oldsmobile has its franchise meeting Monday morning. GM, which announced in December that it is discontinuing the Olds line because of plummeting sales when it tried to shift the brand to younger buyers, is attempting to mitigate some of that damage with dealers with a new -- and sweeter -- buyout deal announced last week.

GM will pay out as much as $2,900 per Oldsmobile sold during a dealer's best year since 1998, not including fleet sales. That's up from an earlier offer of $2,400 per vehicle. In return, a dealer must agree to cancel the Oldsmobile franchise agreement at a later date and the dealer gets to keep its real estate holdings and buildings.

Dealers that offer Oldsmobiles exclusively or whose overall sales are more than 75 percent Olds vehicles would get paid the most and the minimum payout would go to dealers whose Olds sales are less than 10 percent of the cars they sell.

Many Oldsmobile dealers nationwide are unhappy with the decision to phase out the 103-year-old brand and say their dealerships have become worthless. But that isn't the case in Las Vegas, where two Oldsmobile dealerships say they'll survive.

Sean Brady, director of fixed operations for Findlay Oldsmobile at the Valley Auto Mall, said two factors play into his dealership in surviving the Olds shut-down.

Findlay offers other car brands -- Suburus and Saabs -- in addition to Oldsmobiles. The other Las Vegas Olds dealer, Courtesy Oldsmobile, also offers Isuzus, Mazdas and Kias.

In addition, Brady says the Las Vegas market is far healthier than most cities.

"You can't compare Vegas to anyplace else," Brady said. "Nothing is growing like this market. If we were in a small town in the Midwest, maybe we'd have more of a problem. Those (dealers in small communities) are the ones that are worried.

"From our point of view, things are pretty solid and we've always had a great relationship with Oldsmobile. I think a lot of other dealers aren't looking at the big picture. They (GM) had to make a business decision about Oldsmobile, and I think in the end, they're not going to stick it to the dealers. They need us as much as we need them."

Brady said he expects to see some of the frustration boil over at the show, which he plans to attend.

Meanwhile, Chrysler manufacturers also may be on the hot seat with dealers after announcing plans to cut financial support. Published reports have said 4,410 dealers will lose on average about $500 on every Chrysler, Jeep or Dodge vehicle they sell as a result of the cutbacks.

Chrysler reported a third-quarter loss of $512 million and said that its fourth-quarter loss could be double that. In addition to the cutbacks in incentives and advertising, the company has announced it is trimming 26,000 jobs over three years. Production will be scaled back in plants in four states and Canada.

While most of the attention may be focused on GM and Chrysler, the nation's other major domestic automaker will be represented by Las Vegans.

Bill Nance, general sales manager of Gaudin Ford, the city's oldest operating dealership, said NADA is an opportunity to share ideas on new promotional products as well as get face time with the manufacturers.

"We get some insights from the manufacturer, but they're also interested in our feedback," Nance said. "We're out with the buying public every day and have on-the-spot knowledge of what the customer wants."

Nance said there's "nothing earth-shattering coming out of this NADA for Ford," but he will review the trade show looking for new promotional ideas.

The NADA trade show, which will feature more than 430 companies displaying over 313,000 square feet, is more about promotional devices and opportunities for dealerships and not about the cars themselves.

Earlier shows in Detroit gave dealers and opportunity to see vehicles and the gadgetry going into the new models. The NADA show includes exhibitors in marketing and advertising, accessories, financial services companies, body shop improvements and even car wash equipment.

NADA also includes a slate of workshops and speakers. Over the four days of the show, delegates will hear from G. Richard Wagoner Jr., president, chief operating officer and chief executive officer of GM; columnist and author Mitch Albom; and Desert Inn owner Steve Wynn.

NADA'S Morrissey said Wynn, who will speak Monday afternoon, was invited to discuss his role as an entrepreneur since many of the organization's members believe they have that role in their own communities.

At a closing dinner at Caesars Palace Tuesday night, NADA delegates will be entertained by singer Melissa Manchester.

The NADA show kicks off a busy month of Las Vegas conventions, including two of the largest events of the year and another as big as the NADA event.

The first of two Men's Apparel Guild in California (MAGIC) fashion conventions for 2001 is scheduled Feb. 13-16 in several Las Vegas venues. MAGIC will have about 90,000 in attendance and the organization will return to the city for a second show in August.

A smaller fashion event, the World Shoe Associates show, arrives at the Sands Expo Center Feb. 23-27 with 30,000 delegates.

And, a major construction exhibition, the World of Concrete, will bring 75,000 people to the Las Vegas Convention Center and the Las Vegas Hilton Feb. 27 through March 2.

archive