Oakland follows Detroit
on June 9, 2009
At Bay Bridge Auto Center, Mike Khugiani is Chrysler’s latest casualty.
“Chrysler decided to discontinue the dealership with us,” said Khugiani, the general sales manager. That means fewer cars to offer at the dealership that also sells GM and Nissan.
On the other side of the street at Honda of Oakland, the long decline of the U.S. auto industry has only added customers, said Raymond Kwan, sales manager Honda of Oakland.
Detroit may be 2,400 miles away, but the U.S. car industry’s saga of competition from abroad and the recent collapse of the U.S. economy have brought the Midwestern auto crisis to Oakland’s auto row.
Once busy with more than 20 dealerships, the 1.3 miles from Down Toyota on Gamet Street to Oakland of Audi on 24th Street and Broadway, has already lost at least five dealerships this year, and Bay Bridge Auto Center will close its lot for good this Friday.
“It’s a steal,” said Khugiani of the remaining inventory in which the Bay Bridge is offering discounts as high as 45 percent. Khugiani said the strategy worked well during Memorial Day weekend. They sold 25 cars, 13 of which were Chrysler.
However, a temporary spike in sales failed to save their operation. Earlier, with sales down 50 percent, the owner closed two other locations on Auto Row. Khugiani said the government was partly to blame for “fanning the negative perception on American cars” and made consumers think twice before they buy.
Japanese car dealerships said their business is down, but not disastrously so.
“We were busy over this Memorial Day weekend,” said Kevin Wong, manager at Down Town Toyota at 4145 Broadway. Wong said Downtown Toyota, Subaru and Saab along with their used cars dealership sold 37 cars over the weekend. “Even though we do not have as long a wait-list for the Prius as we used to, we are doing fine.”
However, even Japanese cars are not an easy sell.
“Customers are getting more conservative,” said Tee Tran, a sales person at Down Town Toyota. “They used to buy cars immediately, but now it takes two or three days before they decide to buy.” Downtown Toyota is offering zero percent financing and cash rebates up to $3000 .
Others agreed. “Customers are getting more car savvy, because they can research on the Internet,” said Mathias Stolz, a sales and leasing consultant at Down Town Subaru at 4133 Broadway. Stolz, who works on commission, said he has to do a lot more outreach to find customers. “I give out my business card even at Starbucks, because they might know somebody who wants to buy a car.”
Honda of Oakland said better customer service is the key to new sales.
“Thirty percent of our customers are repeat customers, and over 50 percent of our customers are by referrals,” said Kwan, who gives training to customer service representatives every morning. He said that “word of mouth” is vital. His dealership is giving money to local schools and offering employee pricing to teachers, because “it all builds up our reputation.”
Even though Honda of Oakland’s sales dropped about 20 percent to 250 car sales a month, the strategy seems to be helping. The 27-year old dealership is the biggest tax revenue generator among the car dealerships in Oakland. Those revenue dropped $1.1 million in 2008 compared to 2007 revenues.
DownTown Toyota sells 125 to 150 car a month and Bay Bridge Auto Center’s sells 50 to 75 cars a month, according to the dealerships.
The German car dealerships said they still attracted customers looking for quality.
“People are recognizing the quality of German cars again,” said Kendal Qvale, who is in customer relations at Audi of Oakland. “We do not get customers from Chrysler and General Motors as Toyota or Honda does, because we are targeting more affluent people.”
Audi of Oakland is the only Audi dealership in the Easy Bay and it recently moved up two blocks to 2345 Broadway and renovated the store.
“It was a good investment, people are not passing by our store any more and foot traffics increased,” Qvale said. Over the Memorial Day Weekend, they sold 15 to 20 cars, which she said was almost equal to last year’s sales over Memorial Day.
Moe Shaban, the floor manager at Volkswagen of Oakland at 2740 Broadway, said their sales too picked up over Memorial Day and were even “slightly stronger” than last year. The worst time, he said, was last November when sales dropped almost 50 percent to 55 to 60 cars. Nowadays sales are back to 85 cars a month.
Back at Bay Bridge, Khugiani said they will stay open, hoping that General Motors, now in bankruptcy, keeps them going. “I am trying to be positively optimistic,” Khugiani said.
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