Car dealers roll out incentives ECONOMY

Stacey Nelson (middle) and Hal Biliske (right) drove in from Santa Cruz to get financing from finance specialist Kameel Samawi (left) at Carl Chevrolet, in San Jose, a third generation dealership in San Jose, Calif., on Tuesday, January 27, 2009. less Stacey Nelson (middle) and Hal Biliske (right) drove in from Santa Cruz to get financing from finance specialist Kameel Samawi (left) at Carl Chevrolet, in San Jose, a third generation dealership in San Jose, ... more Photo: Liz Hafalia, The Chronicle Photo: Liz Hafalia, The Chronicle Image 1 of / 1 Caption Close Car dealers roll out incentives 1 / 1 Back to Gallery

The 2008 Chevrolet Suburban is a lot of vehicle, perhaps more ideally suited for the U.S. Border Patrol than for the average Bay Area commuter. But Kent Carl, of Carl Chevrolet in San Jose, would like to think it's too good of a deal to pass up.

The manufacturer's suggested retail price for the muscular and loaded V8 with three rows of seats is $39,280. But Carl, the general manager at the dealership, has it priced at $25,988. That's a savings of stacked-up incentives totaling $13,292.

"We've had some activity on it," said Carl, meaning noses have been pressed against the windows of the Suburban parked conspicuously in front of the Carl family business on Capitol Expressway Auto Mall.

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"Sale Sale Sale" signs are aflutter there and at dealerships across the country as auto dealers scramble for scarce customers amid the severity of the financial market crisis.

Still, dealers are offering considerable quality - there's pretty much a consensus that vehicles are more efficient these days - at attractive prices laced with incentives.

It's an uphill climb, of course. The economy is bogged down and the unemployment rate is climbing. Consumer confidence is in a rut. Consumers aren't going to make major purchases, as clouds of uncertainty gather and anxiety mounts about real and feared-for job loss.

The GMC dealership across the street from Carl Chevrolet has gone out of business. In fact, 125 auto dealerships shut in California in 2008, compared with 20 in 2007, according to the California New Car Dealers Association.

The association said registrations of new cars and light trucks declined 23 percent in 2008. They were down 39 percent in the fourth quarter, compared with 2007.

"Incentives have not brought in droves of people," said John M. McDonald, a spokesman for General Motors in Detroit. "In the last 60 to 90 days we have seen demand in the marketplace that is historically low. I'm talking about a level of U.S. car sales not seen since 1958. It is breathtaking."

Still, dealers would be loath to stick their heads in the sand.

At Carl Chevrolet - it was the first building among apple orchards when it opened in 1967 - Carl knocked down the price on the Suburban to move it off the lot. He shaved $7,000 in "customer cash," a discount on the price of the truck, and another $3,000 in "loyalty bonus cash," available to people who own or lease a 1999 or newer model year GM vehicle. The dealership discounted the remaining $3,292.

In good times - in particular, the days following the Sept. 11 attacks when General Motors launched the "Keep America Rolling" campaign that bolstered sales - Carl Chevrolet sold more than 200 vehicles a month. The volume is now slightly less than half that, and in September and October, when credit tightened, it shrank to 50 to 60 per month.

"We started cost-cutting early on" last year, said Carl, 36. "We cut back on advertising, we shed about 30 percent of the workforce. It was significant. Cutting jobs is always something you do not want to do, the most difficult thing, but we needed to do it to survive."

In a perfect world, Carl will rehire some of those workers as sales pick up - and he is optimistic they will. The Suburban is the last of 10 he had on hand, and all 15 Chevrolet Tahoe models in the inventory were sold. There has been an increase of 57 percent in car sales from late December to late January.

"It's getting back to almost the time to start advertising again," said Carl.

Dodge is advertising aggressively nationally with a campaign called "Driving America," offering as an incentive zero-percent financing.

A reduced annual percentage rate is one of the core industry incentives customers are seeing. So is the "pull-ahead lease." That is incentive money customers can use to pay off leases before they expire. GM, for example, will pay up to two months of a GM lease for a customer planning to lease another vehicle.

The loyalty bonus cash at GM, which ranges from $1,000 to $3,000, depending on the model, has attracted customers at Carl Chevrolet which, because it has been in business for 42 years, has a considerable amount of repeat and referral customers, said Carl.

The "customer cash" incentive is at the core, too. For Chevrolet, the most cash - $7,250 - is being offered for the TrailBlazer, because it is being dropped. The truck-based SUV is being replaced by a car-based crossover.

There are many more incentives and they vary around the nation and regionally. On GM and other carmaker Web sites, enter your ZIP code to get incentives near you.

For one, $1,000 rebates have been offered for the Toyota Prius, the hybrid for which in 2004 there was a waiting list lasting several months at Bay Area dealers.

Here's an intriguing incentive: University Dodge in Davie, Fla., got attention recently for a two-for-one sale. Buy a 2008 Ram Quad Cab, from $32,000 to $50,000, and get a barebones two-door Ram truck free.

Hyundai has an ad booked for the Super Bowl on NBC today saying that if you buy a new Hyundai and within a year lose your income, you may return the car and in many cases walk away from the debt.

In Burlingame, E. James Hannay, the president of Rector Motor Car Co., purveyor of Porsche and Audi, wants it known that financing is available, no matter all the pessimistic talk. He has Audi rates as low as 0.9 percent, down from 6 percent six months ago. The Porsche 48-month financing is 5.5 percent, down from 7 two years ago.

Hannay created a provocative radio ad in which he implores people who are able to spend money, to stimulate the economy. People tell him regularly how much they like hearing the message. It says in part:

"Much of the media would have you believe our economy is doomed, that you should hoard your money, but that is the worst thing we can do. That will be a self-fulfilling prophecy. ... So if you can, go out and buy, if not from Rector, then from someone else, and let's get this great country moving again."