Car sales in Md. off sharply in Dec. Low point of 1995 hits recovery

dealers cite consumer caution

January 27, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Sales of both new and used cars in Maryland plunged 26 percent during December, and dealers and economists blamed the drop on the same weakness in consumer confidence that plagued other retailers during a sluggish Christmas season.

Marylanders bought only 18,503 new cars in December, according to yesterday's figures from the state Motor Vehicle Administration. The performance was by far the worst in a year in which new car sales overall dipped 6.5 percent.

"This is a real step backward in the recovery," said Michael A. Conte, director of the Regional Economic Studies Program at the University of Baltimore.

"The same thing has hit retail all around," said Al Shockley, president of Shockley Honda in Frederick and also president of the Maryland New Car and Truck Dealers Association. "The weather was lousy, and with this federal shutdown, we have a lot of federal employees in the state of Maryland, and it's really shaking their confidence."

Dealers said sales took another hit after the blizzard this month. But Mr. Shockley and Robert Russel of R&H Motor Cars Ltd. in Owings Mills, said their traffic rebounded afterward.

"We sold a few four-wheel-drive vehicles, but the [blizzard] week was pretty much lost," said Mr. Russel. "But it seems the month will be pretty much salvaged."

Car sales are one of the leading indicators economists use to project the health of the economy. The Maryland figures are consistent with signs of a broad, though not catastrophic, slowdown in the car business.

The top three U.S. automakers -- Ford, Chrysler and General Motors -- either have reported or are expected to report significant drops in fourth-quarter profits. And an auto trade journal reported this week that U.S. and Canadian vehicle makers have cut production by 14 percent this month, compared with early last year, to trim inventories.

Mr. Conte said lower consumer confidence and rising consumer debt probably contributed to the Maryland sales dip.

He noted that the December decline in used car sales was smaller, at only 15 percent, and that the price of used cars rose faster than prices of new wheels, indicating that more buyers are opting for the lower-risk choice of a used car.

He said he expects to see car sales pick up by the spring, after a federal budget plan is worked out. But dealers said they expect car sales to be flat or to rise only slightly this year.

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