Sales at Columbia used-car dealership drop

Thursday, October 30, 2008 | 6:41 p.m. CDT; updated 10:59 a.m. CST, Wednesday, February 11, 2009

COLUMBIA—Six months ago, Ashland Auto Sales was selling 20 to 30 used cars a week. Today, the used-car dealership off Business Loop 70 is selling about half that number, thanks in part to fluctuating gas prices and stricter loan requirements.

"In this slow economy we have small profits, and some cars have been here a while, so we are losing some money," said Mohammed Diab, owner of the dealership for six years. 

The dealership lost $4,000 when it sold a 2002 Cadillac Escalade at a reduced price, for example.

Car buyers have become more conscious of how purchasing a vehicle will affect their wallet in the coming months.  Over the summer gas prices spiked, and customers began giving up their gas-guzzling SUVs for smaller, more fuel-efficient vehicles.

"Customers were basically coming in and trading in their big cars for something small," said Amil Kapili, a salesman at Ashland.  "So, we were selling, but in the meantime we were also getting bigger cars that were hard to sell."

Customers are also finding that securing a car loan is now more difficult. Financial institutions that buyers would ordinarily employ when purchasing a car now have stricter guidelines, Diab said.

GMAC, General Motor's lending corporation, recently announced that it would only give loans to customers with credit scores of at least 700.  

At Ashland, vehicle financing is up to the customer, which means less of an adjustment for the dealership. 

"It's cash only, a one-time payment," Kapili said.

Even though Ashland has seen no need to respond directly to financing difficulties, salesmen at the dealership say they have noticed the negative side effects.

"Six months ago, we were selling more cars because it was easier for the customers to get their hands on credit," Kapili said. "We had a guy from Jefferson City. He came for a car and came very close to being approved, and they rejected him. Banks are getting stricter with lending."

October is also a traditionally slow period for car sales, according to Kapili.

"People buy cars in August and September, and October and November are slower months," Kapili said. "Then, as the semester ends, many students that are graduating or moving will buy cars."  

Both Diab and Kapili are optimistic that Ashland will continue to be successful despite the slowing economy. Because Ashland is a smaller dealership that can accept lower profit margins, Diab predicted it would not suffer as much as larger, new-car dealerships.

"When there are fluctuations in the economy, customers tend to buy used cars with low mileage and good quality rather than something brand new and have to figure out how to finance the vehicle," Kapili added.

"We are trying to cut our expenses, and we are working on some exports," Diab said. "We have some international students that will buy cars and send them overseas. Or students were here and they left, so we try to find the cars they want and send it to them."

When it comes to interacting with buyers on the lot, Kapili said he is not a pushy salesman.

"I welcome the person and tell them to make a selection, and I help them to narrow down the options," he said. "Usually, to be honest, I do not talk about budget because when they come to the lot they have singled us out for the low price."


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