- The Washington Times - Tuesday, May 30, 2000

Car dealers were flooded with eager buyers yesterday the biggest sales day of the year despite signs of a slowdown in consumer spending.
Many car dealers in the Washington area said the number of shoppers has not trickled off, although industry analysts are predicting nationwide sales to drop 2 percent in May, the first drop in almost two years.
"We sell the most expensive cars with the worst gas mileage," said Ramin Ahmadi, general manager of the East West Lincoln Mercury Inc. in New Carrollton, Md. "But, [traffic] hasn't slowed. We're way ahead of last year."
Memorial Day was no exception. His dealership sold four cars over the weekend last year. This year he sold 12 Saturday and Monday, the two days of the weekend he was open.
May sales are up 10 percent to 15 percent from a year ago, he said.
Shoppers at area dealerships, like Lustine Nissan in Lanham, Md., said waiting indefinitely until interest rates begin to drop to buy a car is not an option.
Kenneth Divel of Frederick, Md., said the motor on his Mitsubishi Mirage had died twice when he finally decided to check out a Nissan Sentra. He said it is less expensive for him to buy a new car than fix his old one.
"I'm not being too picky; I need something immediately," he said.
He would rethink his decision to buy his first new car only if the Federal Reserve raised interest rates another full point. The Fed has raised interest rates six times in the past year, the last time by a half point.
Nationwide, sales of new cars and light trucks have risen from the year-earlier period each month since August 1998, powered by an expanding economy that has the lowest jobless rate in 30 years.
But the high-flying stock market has begun to fall. The Nasdaq Composite Index dropped 21 percent this year through Friday, while the Standard & Poor's 500 Index fell 6 percent and the Dow Jones Industrial Average slid 10 percent.
Consumer spending rose in April at the slowest pace in nine months, suggesting that the Fed's rate moves may be damping demand.
But for Kristi Currie of Temple Hills, Md., only a serious recession or depression would prevent her from buying a car. She was looking at buying a used Nissan Altima or Nissan 626.
"I need a car because I live out of state," said Ms. Currie, who attends college in North Carolina.
A May 25 Gallup poll showed that nearly two out of three Americans rate the economy as "excellent" or "good," while only 9 percent consider it "fair" or "poor."
However, the survey said 37 percent of Americans are pessimistic about future economic conditions compared with 23 percent in January.
"Don't let the economy fool you even though it looks like it's going fine," said Greg McCray, a window shopper at the Lincoln Mercury dealership in New Carrollton.
Otis Harper of Waldorf, Md., who was looking at Volkswagen Passats and Nissan Altimas to replace his 1987 Honda Civic, said interest rates, prices or both would have to soar for him to reconsider buying a new car or change his spending habits.
That attitude allowed dealers to post strong Memorial Day sales.
"This weekend's sales were better than last Memorial Day [weekend]," said Vincent James, general manager of Lustine Nissan. He said the dealership expects a 25 percent increase in car sales this weekend from a year ago.
"Our industry is actually booming," said Gil Weiss of Ted Britt Ford in Fairfax, Va.
Ford sales nationwide rose 11 percent for May 1999 from May 1998, and the company is on track to beat those numbers, he said.
Memorial Day is the busiest car-buying day of the year, followed by Labor Day and Presidents Day, respectively, he said.
His dealership sold 130 cars this weekend, up 9 percent from the 119 it sold a year ago.
"Interest rates haven't risen that much, and we haven't felt the full effects of that anyway because the industry has been giving incentivized rates," Mr. Weiss said.
John Kennedy, manager of Ourisman Mitsubishi in Marlow Heights, Md., said his dealership is offering special financing programs to offset higher interest rates.
His sales jumped 120 percent this weekend from a year ago.
Car dealers will continue to offer incentives to remain competitive, despite any economic slowdown, Mr. Weiss said. They need to capture a larger market share and keep factories producing a consistent number of cars.
"The pie only slices up so far," he said.
He has noticed a slowdown in sales of some of the higher-priced vehicles, namely sport utility vehicles. "I'm really more concerned about that than a subtle change in the stock market or a subtle change in interest rates," Mr. Weiss said.
Joe Wood, sales manager for Heritage Auto Plaza in Alexandria, Va., is one of few dealers whose sales have been dampened by the wet and cold weather.
"It's not as good as last year," he said. "All four Saturdays, it poured rain and that killed us last month."
Usually, he sees about 180 customers per month. This month, only about 95 have visited and sales have dropped in half.
This article is based in part on wire service reports.

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