Car Dealers Work For Love, And $10 Profit
The Sunday Age
Sunday November 23, 2008
PHILLIP Mance's family has been in the new car business since 1978 and he is determined to stick with it - even if it means selling cars for $10 profit.
Faced with an industry in turmoil, the owner of Alan Mance Holden in Footscray believes he can ride it out, although he suspects that some new-car dealers will hit the wall before the economy improves."It's just the car business," Mr Mance said yesterday. "It goes up and down and round and round. It can be fun, but it can also be frustrating."Some cars are not selling, but I don't think we've got to desperation stakes just yet. The thing is you can make good money but you can also lose loads."Australian Automobile Dealers Association president John Byrne, who is a new-Ford dealer in Melbourne, said many of the state's 400 new-car dealers, who employ 20,000 workers, were losing heavily in the tough economic climate.One industry expert estimated that 50 to 60 Victorian dealers could close, with the loss of between 2000 to 3000 jobs.Mr Byrne said the state of the new-car industry was the worst he had seen - presenting keen buyers with the chance to buy cars at close to cost price."Margins are very, very tight," he said. "It's not unusual for dealers to make a $10 profit selling a new car."We're all under pressure. It is the toughest time and there are a lot dealers under duress but we love cars. Without question, it's part of us. It's part of our blood."Victorian Automotive Chamber of Commerce chief executive David Purchase said new vehicle sales in Australia had slumped (down 11 per cent from last year) and dealers were desperate to sell."Dealers are doing everything they can to move cars out of the showroom," he said."If people are thinking of buying a new car, you couldn't find a better time."Mr Purchase said new car dealers are facing the same problems as real estate agents - lots of tyre kickers but few buyers.He said most new-car dealers were "self-made men" who would fight to stay in business as long as possible."They might be the butt of every joke that goes on, but they're very solid citizens."Mr Purchase estimated that up to 60 new-car dealers could close, with the loss of up to 3000 jobs, because they were having trouble obtaining finance.The financing crisis was sparked when GE Money and GMAC Financial Services announced they would pull out of wholesale lending to the industry at the end of the year because of the global financial crisis, leaving car dealers to find money elsewhere to stock their car yards.It has been estimated that the credit hole created by the two finance companies' departures will be $2billion annually.Mr Purchase said car industry groups hoped to hold crisis talks with the financiers tomorrow to try to sort out the situation. Dealers want six months to find alternative financing, not the 60 days being demanded by GE and GMAC.The Federal Government is believed to be considering setting up a special $2billion car financing funding pool as a rescue package to help new-car dealers stay afloat.- When the first Holden 48-215 rolled off the production line 60 years ago to become Australia's first locally produced car, Prime Minister Ben Chifley famously said: "She's a beauty."Yesterday, Jack Rawnsley, 97, an engineer who worked on the development of the car, later known as the Holden FX, agreed with him."It still is a little beauty," Jack said when helping GM Holden celebrate the 60th anniversary of the first Holden at the company's Port Melbourne headquarters."It's my favourite.I'm very proud.Part of my life's in that car."He said motoring came alive in Australia in 1948 because people were able to afford to buy a car.
© 2008 The Sunday Age