Consumer Fear at Root of Auto Woes: Auto Dealer

The current problems facing the automotive industry are a result of consumer fear, not the Big Three U.S. automakers, according to John Bergstrom, CEO of Bergstrom Automotive, one of America’s most powerful car dealership groups.

“We’re in a situation where people are afraid to spend their money,” said Bergstrom. “We have great deals, and it’s a very good time to buy a car, but people are hesitant to do it, and it’s causing a logjam effect with inventory building up.”

In the middle of September, Bergstrom's business fell about 30 to 35 percent, and the problems have continued to worsen since, he said. Bergstrom Automotive operates 25 car dealerships, 13 of which are owned by General Motors , but Bergstrom said the dealership is seeing problems across the board, not with just General Motors and Ford cars.

“There’s been a lot of talk about problems with financing and the wrong products. We don’t believe that’s the issue," he said. "The real issue is we don’t have people looking, and we have to get that started.”

Bergstrom said one way to do this is to offer a 75-day shot in the arm to the automotive industry through customer credits.

For example, for a span of 75 days a consumer could buy a car - American or foreign - and get a $5,000 credit from the government and another $5,000 credit from the manufacturer toward the purchase.

“Somehow, we have to endorse the fact that buying a car is okay, and right now there certainly is a challenge," he said. "It’s almost politically incorrect to spend money - it’s, like, socially unacceptable - and clearly that’s going to cause a real dire problem if it continues.”