New-car sales in Md. fell in Sept.

8.1% dip occurred despite zero percent financing incentive

October 26, 2001|By Ted Shelsby | Ted Shelsby,SUN STAFF

Despite zero percent financing plans that sparked a flurry of showroom activity after the terrorist attacks, new-car sales in Maryland fell 8.1 percent during September, the state Motor Vehicle Administration reported yesterday.

The decline in Maryland was not as great as it was for the country as a whole, where sales were 12.5 percent lower last month compared to the same period last year.

September was a roller-coaster month, dealers said. Sales started off decently, but business slowed sharply - some dealers said it halted - after the Sept. 11 terrorist attacks.

Sales picked up again - with a vengeance - later in the month, thanks to auto manufacturer incentive programs, including zero percent financing.

"It was incredible," said Joseph B. Aiello, president of JBA Chevrolet in Glen Burnie. "When GM announced its `Keep America Rolling' zero percent financing, sales really took off. I was absolutely stunned.

"It's unbelievable. It was like our economy was rip-roaring, and it continues today. We sold 26 units, new and used cars yesterday." That compares with normal sales of 10 to 15 vehicles in a day, he said.

Jerome H. Fader, president and chief operating officer of Mile One, an automotive sales group that operates 35 new-car dealerships in Maryland, said that business "bounced back like a boomerang" during the second half of September.

New-car sales figures are a closely watched barometer of the state's economic health, but September's numbers don't offer a true picture, according to Anirban Basu, director of applied economics for Towson University's RESI.

"An 8 percent drop in sales does not represent the full drop in demand," he said.

He said business was artificially stimulated by the zero-percent financing plans of Ford, General Motors and Chrysler, along with incentive plans from other manufacturers.

"It was done in order to move product," Basu said. "It was a way to clear out a lot of 2001 vehicles to make room for the new models. They are sacrificing sales in the future for short-term profits."

Aiello said that he and other dealers are concerned about whether the current sales boom is tapping into future business.

"We will just have to wait and see what happens," he said.

Basu said zero percent financing "made all the difference in the world. Consumers were going out car shopping with the mind-set that unless they got an exceptionally attractive deal, they wouldn't buy."

Said Vincent P. Trasatti Sr., president of East-West Lincoln Mercury in Annapolis and chairman of the Maryland New Car and Truck Dealers Association, which represents about 320 of Maryland's 350 new-car dealerships: "There is no doubt in my mind that zero percent financing had a tremendous impact on business last month."

General Motors announced this month that it will extend its interest-free financing plan until Nov. 18. It was scheduled to end Oct. 31.

Ford and DaimlerChrysler, which are also offering interest-free financing, have not said whether they will extend their programs, which are also scheduled to end Oct. 31.

According to the MVA, dealers sold 31,042 new cars and trucks last month, compared with 33,789 during September 2000.

Last month's sales were the third-highest for any September since the MVA resumed releasing sales figures in 1991.

Business was even more active on used-car lots. The MVA reported that 49,349 used cars and trucks were purchased last month, a gain of 0.8 percent over the 48,954 previously owned vehicles sold in September last year.

Trasatti said that used-car sales are more stable than new car sales and are less affected by dips in the economy.

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