http://www.autonews.com/apps/pbcs.dll/article?AID=/20080407/ANA06/804070305Dealers: Lame-duck Isuzu helps clear lots
Kathy Jackson, Automotive News, April 7, 2008
LOS ANGELES ù It won't set the world on fire, but Isuzu logged an 11.4 percent year-over-year sales increase in the first quarter ù climbing to 2,007 units for the three-month period.
Pretty meager, for sure, but it marked the first time that the lame-duck brand has recorded a quarterly sales increase since the second quarter of 2000.
For dealers it was great news. Isuzu will stop selling light vehicles in the United States on Jan. 31, 2009. The brand's 201 dealers must clear their inventories by that time, and so far the factory is keeping its promise to help them do that.
Dealers had 3,125 vehicles in stock on March. 1, said Isuzu Motors America spokesman Chip Letzgus. About 20 percent were 2007 models.
Letzgus says the company is offering dealer cash incentives ranging from $4,000 to $8,000 to move the three Isuzu nameplates ù the five-seat Ascender SUV and the i-290 and i-370 small pickups. Dealers say they can order new Isuzus through April.
Dealers also could earn additional money ù as much as $1,500 per vehicle sold ù through March 31 if they spend at least half of that money on exclusive Isuzu advertising.
The advertising program will not be renewed, but the lavish dealer cash rebates will continue.
"It's really too bad about them leaving," says Mike Donohue, owner of Automax Hyundai-Isuzu-Subaru in Norman, Okla. "But the company couldn't have done a better thing for the dealers" than the incentives.
Donohue, an Isuzu dealer since 1989, says "all of the rebates come straight to the dealers. We use them to work the deals."
Orderly evacuation
Isuzu's sales -- long in decline -- rose in the first quarter as the brand works to clear inventories before pulling out of the U.S. next January
2008 2007 Change
Jan.-March 2,007 1,802 11.40%
Source: Automotive News Data Center
Plunging sales
Isuzu's sales have been in a tailspin for years, plummeting from 103,937 in 1999 to 7,098 in 2007. The automaker told of plans to leave the United States in January ù and promised it would boost incentives to help dealers clear their inventories.
Isuzu also offered all dealers the opportunity to become service dealers. If they agree, dealers get a signing bonus equal to $1,000 per car sold, based on an annual average using their last four years of sales.
Those who decline to become service dealers are offered the same assistance given to dealers who terminate franchises under their sales and service agreements.
Letzgus says Isuzu has signed up 141 service-only dealers since February and hopes to reach 200.
One who will not sign up is J.D. Tomlinson, owner of Tomlinson Motor Co. in Gainesville, Fla. Tomlinson acquired his Isuzu franchise in September 2006, when Isuzu sought new dealers.
"I'm cutting the cord with Isuzu," Tomlinson says. "We came to terms. They were fair. It wasn't a one-sided deal. They never made any long-term promises to me, so I can't be too mad at them."
Tomlinson, who specializes in used cars, says Isuzu was his first new-car franchise. He spent less than $100,000, excluding the initial allocation of 30 vehicles.
"My Isuzu sign wasn't up two days before they called me and said they weren't going to continue in the United States," he says.
"I won't continue to do Isuzu service. Being so new, I don't see it as a huge benefit. The (Isuzu) dealer in this area was not selling a lot of them, so there doesn't seem to be a lot of warranty and pay work."
Disappointed, not mad
Dennis Buchholz, operations manager at Autoplex Cadillac-Isuzu in Lake Charles, La., says his dealership once sold hundreds of Isuzus annually.
"We've done very well with Isuzu," he says. "I'm disappointed that they are leaving. I was hopeful that a diesel truck would come along."
He credits Isuzu for helping dealers move inventory and says Autoplex has signed up to be a service dealer
"I think they're being fair," Buchholz says. "Our store was dualed with Cadillac, so the store won't go away."
Oklahoma dealer Donohue ù who has about 54 vehicles in inventory, mostly 2008s ù also will be a service dealer.
"There's no reason not to remain as a service dealer," he says. "There are so many in service around here."
Donohue says he sells about 10 to 12 new Isuzus and another 10 to 12 used each month.
"Even the used Isuzus sell just as well as ever," he says. "Our customers don't seem to be worried. It's apparent to customers that Isuzu is not going away; they just won't be selling light vehicles."
Isuzu Motors America, with headquarters in Cerritos, Calif., will continue to distribute parts for service dealers. It also handles the company's separate commercial-vehicle and powertrain operations in North America, which are not going away.
"We'll still be working with Isuzu," Donohue says. "They've always treated the dealers right."
