Business News

Dealer's Choice: Thoughts On The Good, Bad And Ugly Of The Auto Industry

Rob Reuteman,|Special to CNBC.com

Don Hicks, Carol Scott and Pete Tynan are wandering the aisles of the Detroit Auto Show this week, collecting intelligence they can use to better operate their dealerships in Colorado. For the U.S. auto industry, intelligence is a precious commodity this year.

Consider that:

  • New car sales plunged more than 20 percent in 2009 to a 27-year low of 10.43 million units, the lowest level since 1982.
  • Battered by worldwide recession, Chrysler and General Motors reduced operations after filing for bankruptcy.
  • New car sales in 2009 were 40 percent lower than the peak of 17.4 million units registered in 2000.
  • Analysts say 2010 sales are expected to recover to only 11 million units.

The Players

Hicks, Scott and Tynan all operate dealerships along busy Havana Street in Aurora, a sprawling suburb east of  Denver.

Hicks, in Detroit for his fifth auto show, sells Subaru, Suzuki, Hyundai and Kia from Shortline Automotive. He also owns Porsche of Colorado Springs. He has 38 years in automotive retail business.

Tynan is general manager of Tynan Volkswagen, owend by his cousin Sean, grew up in the car business and has spent his entire career on the retail side. He's attending the show for the fifth time.

Scott,  general manager of Gateway Mazda, counts this as her first Detroit Auto Show. She's worked in the business for 25 years, beginning her career as a clerk in a dealership accounting office.

The trio recently down with CNBC.com for a roundtable discussion of what it’s been like at the battered auto industry's ground zero—the dealership showroom and what they expect out of the Detroit show.

What cars will sell best this year?

Scott: Fuel-efficient vehicles. When gas prices are high, our dealership is on fire. When prices go down, traffic goes down.

Tynan: For us, diesel-powered vehicles. You get great mileage without sacrificing performance. The rest of our line doesn’t sell as fast. I can’t keep enough diesels in stock because of production quotas in Germany.  Germany just ended a 12-month-long, cash-for-clunkers program, which was detrimental for us because we couldn’t get as many cars.

Since the program ended they won’t need as many. VW is coming out with a diesel roadster this year that should sell very well. They’re selling a diesel 4x4 pickup in Argentina this year, but it’s  not in the U.S. yet. That would sell big.

VW is taking  diesel-fuel economy and deliberately spreading it across their fleet.

Hicks: Subaru is on a roll, coming off its best year ever. They only make all-wheel-drive vehicles, which offer great comfort, safety and security. They’ve got a redesigned transmission that is showing mileage in the high 20s in town.

We usually try to keep 250 Subarus in stock. Right now we have 36, so there have been some replenishment problems. We typically sell 85 in a month. Last month we sold 132. But I have 178 coming between now and February.