photo courtesy Landers Auto Group
Kent Ritchey will gladly sell you a car. He’s got a gift for making a sale, and is so accomplished that he employs an army of salespeople to sell vehicles for him in the Mid-South. Ritchey is president of Landers Auto Group — eight rooftops and 12 franchises with 450 associates. He also is president of the Greater Memphis Auto Dealers Association that represents 54 rooftops, so he knows which way the wind is blowing.
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He pays close attention to the numbers on dealers’ lots, which of late have been dismaying. Ritchey cites figures from 45 of the 54 dealerships that show the disparity. In January, the group was up less than a hundred units over January of 2019. “But in February it was up almost 200 units,” he says, “which was up to 12 percent over the February before. So we were on track for a great year and the first 15 or 20 days of March were fantastic.”
But looking at new car sales the first weekend of April against the same weekend of April 2019, it was off about 45 percent.
Ritchey says the result shows, “Everybody is conserving cash, deferring mortgages and/or rent payments. And fortunately, all of our OEM captive finance companies and the major banks that play in that field are deferring monthly interest charges.” He says most dealerships have gone to reduced hours, and there are furloughs and pay cuts.
Inventories, meanwhile, are still on the lots and dealers are doing all they can to get vehicles moved off. “The factories have shut down,” Ritchey says, “and you have fewer new cars coming in, but you’ve got huge inventory sitting on the ground, and they eat cash every day, like cows eat grass.”
With sales being down, it’s urgent to move the stock. “Once everything opens back up,” he says, “our franchise partners want us to take orders, but in fact, they’re not even slowing down on taking the orders. They’re calling every day wanting us to buy something off in the future.”
So the incentives have been unusually generous. “This is my 50th year in the retail car industry,” Ritchey says. “I have never seen incentives at the level that they’re at now.” Many new cars can be had for zero percent loans for 84 months, some with payments deferred for six months.
“We don’t know what that future is,” Ritchey acknowledges, “but we’re all optimistic.” He believes the federal incentive cash going directly into taxpayers’ accounts will help drive business and the CARES Act payroll protection plan helps with employees.
“I think everyone is prepared for sometime in the summer or late summer to come out of this thing,” he says. “That’s the information we have. We’re looking at what the economists are forecasting and what our lenders are telling us. So we’ll take it to July and then we’ll see when we have more information.”
