Dealers have plenty of worries, but a fiscal cliff isn’t one of them

Automotive News | December 7, 2012 - 3:02 pm EST

Many folks, including some auto executives, have a watchful eye on Washington.

There are negotiations under way to avoid looming spending cuts and tax increases. And if Democrats and Republicans in Washington fail to reach a deal to avoid the so-called fiscal cliff on Jan. 1, the result could leave a dent in many consumers’ pocketbooks.

That would be bad news for 2013 car sales.

Yet many car dealers remain stolid, believing it’ll all work out.

“They’ve had fiscal cliffs for years and years, they get everyone all worked up,” said Peter Spina, owner of Lincoln of Wayne in Wayne, N.J. “I think 2013 will be better than 2012 and things will stabilize.”

Car dealers are a notoriously optimistic bunch -- and they say so themselves.

“I’m foolishly optimistic, despite being 20 miles from the nation’s capital,” admitted Vince Sheehy, owner of Sheehy Auto Stores in Fairfax, Va. “As long as we have some sort of compromise, I fully expect the problem will get resolved.”

With the unemployment rate dropping, people will need cars next year, Sheehy said. He expects market growth, even though some economists have warned of another recession.

But dealers are not without concerns. Their worries just don’t include cliffs.

For example, many dealers fret about new- and used-car inventory.

Sheehy worries some automakers might overproduce new vehicles next year. That would lead to increased incentive spending and drive down new-vehicle profit margins.

Meanwhile, Spina worries about making up for lost sales during the several days he was closed after Hurricane Sandy struck and left his store without power.

They both worry about used car inventories, which remain tight. If they had more used cars, they could sell more. On the other hand, the low supply keeps used-vehicle prices high, they said.

In short, these dealers have bigger worries than a figurative fiscal cliff. And so Sheehy stays optimistic that Washington will work it out.

“Unless the politicians do something really stupid,” he added.

Hmm.

Jamie LaReau covers auto dealers for Automotive News.Jamie LaReau covers auto dealers for Automotive News.

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