TAX REPEAL REVS UP DEALERSHIPS SALESMEN SAY THEY'RE MOVING CARS FAST.

Byline: Brent Hopkins Staff Writer

The tripling of the car tax slammed the brakes on vehicle sales for the last seven weeks, but its repeal has dealers reaching for their keys once again.

Steven Lavaggi, a Santa Clarita artist, had his eyes on a new Chevrolet Avalanche on Sunday, figuring he'd use the truck for work and write its $30,000 purchase price off on his taxes. Gov. Arnold Schwarzenegger's rollback of the vehicle license fee played a key role in getting him out to dealerships.

``With the tax removed, I'm free to do what I need to do,'' he said, scanning a brochure. ``I'd have been stuck if it had stayed. Once Schwarzenegger repealed it, I was free to buy a car in California again.''

Seeking to close the multibillion-dollar hole in California's budget gap, former Gov. Gray Davis returned vehicle license fees to their 1998 levels on Oct. 1.

Schwarzenegger made the repeal of that increase a key plank of his campaign, and made good on his promise after being sworn in last week. Car dealers across the state cheered his decision.

At Rydell's Chevrolet and Oldsmobile dealership in Van Nuy, general manager Gus Garcia III oversees 36 sales associates, all of whom earn a fee on each car they sell.

The car tax was his first worry, then the smoke plumes of the wildfires further dampened shoppers' enthusiasm. As their customers vanished, worried salespeople took to the phone, calling loyal shoppers in the hopes they could talk them back onto the lot.

``If you earn your living selling cars, when volume's off 40 percent, it really impacts your livelihood,'' Garcia said. ``And when you hear your neighbor's house is on fire, the first thing you think isn't hey, I'm going to buy myself a new Denali.''

But by this weekend, things appeared to be back in full swing, with salespeople closing deals and customers sizing up sport-utility vehicles once again. The California Motor Car Dealers Association blamed the tax for a 33 percent drop in sales for October, with President Peter Welch saying nearly every dealer in the state had a rotten time. High-end dealers fared the worst, with increased fees of more than $1,000 proving too steep a hurdle for most buyers to leap.

Garcia's boss, Jim Lynch, chairman of Rydell Automotive Group, agrees. Though he holds the car tax responsible for his weak month, he says the wildfires and commotion around the governor's race both distracted shoppers when they would have normally been pricing Malibus and Sevilles in his GM dealerships. Even though the automaker stepped in with incentives that offset the tax increase, the malaise hanging over the industry still kept cars on his lot.

``The psychology behind the car tax was stronger than the rebates to overcome it,'' said Lynch, who oversees six San Fernando Valley stores. ``The rebate sold some vehicles, but I don't think it was overwhelming. The rest of the month will be stronger. The governor taking a positive action changes things. ... It was good for the consumers' attitude.''

Proportionally, the license fee was small compared with a new car's purchase price. According to Peter Welch, president of the CMCDA, a $40,000 car's license fee cost $800 before Schwarzenegger rolled it back. Now, it's down to $200.

``If you're looking at $800 or $200, I don't care how much money you make. Wouldn't you wait three weeks to save 600 bucks?'' Welch said. ``That's what people did. People are operating on very tight budgets these days. A few hundred dollars could make a big difference.''

And it did indeed to Michael and Victoria Mirisch. They were cruising the Van Nuys Auto Row on Sunday, seeking out deals on Lexuses and Infinitis. Though they were looking at sport-utility vehicles with $40,000 price tags, Michael Mirisch, a producer and avid sky diver, had the axed tax in mind while trolling the lots.

``If I'm buying a new car, it's gonna cost a big load of money,'' he said. ``I want to pay less money in tax, so I can keep it for myself and spend it on other things. If I save $1,000, that's 100 sky dives, so I've got more money to jump.''

Les Stella, a sales consultant for Big Valley Dodge Subaru on the Van Nuys Auto Row, loves to sell cars. He earns a nice commission on each Durango or Ram he talks off the lot, but he's spent a lot of time shooting the breeze with his co-workers lately, waiting for customers to return.

``With Schwarzenegger in, it'll breathe new life into the car business,'' Stella said, watching over a fleet of parked pickups. ``I think people just didn't feel the car tax was fair. I think this will trigger people's decision to buy.''

After seven lean weeks, Bill Hubbard was glad to find the Sunrise Ford showroom swarming. The special finance manager had to yell to be heard above the hubbub, his voice hoarse from a long day of selling.

``We're swamped,'' he crowed. ``Thank god! We love Arnold.''

Though the car tax repeal fueled Hubbard's admiration, Schwarzenegger's sacking of former Department of Motor Vehicles director Steve Gourley on Monday sealed it. Hubbard said the car industry, which contributed to Schwarzenegger's campaign, had no love for Gourley. With new director Chon Gutierrez in place, Hubbard was ready to get back to selling.

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com