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GM sales a barometer of local economics.

GM sales a barometer of local economics

Sales of General Motors automobiles in Northern Ontario reflect the fortunes of local economies, according to officials with a number of northern dealerships.

An official of a Sudbury dealership says sales have mirrored the stability enjoyed by the nickel city's economy.

"Sales are better than last year," said Reg Wayman, general manager of new car sales for Campbell Chevrolet Oldsmobile. "The local economy is pretty stable right now and people are feeling pretty confident."

At least one North Bay GM dealer says local economic conditions have helped the dealership top last year's sales figures.

"North Bay is unlike a lot of other cities," said Don Evans, sales manager for Macpherson North Bay. "There's been no drastic changes in the economy."

While automobile dealers in Sudbury and North Bay are optimistic about the coming months, dealers in other centres in the region don't share their confidence.

In Thunder Bay dealers say sales either lagged slightly behind last year's pace or dropped considerably during the first half of the year.

"The drop is partially because of the local economy, with the labor strikes, and because of the high interest rates," said Brian Richardson, sales manager for Dominion Motors Pontiac Buick. "But it's not the rates, it's the uncertainty over whether they're going to rise or not."

In addition, Thunder Bay dealership had to contend with a strike by the local mechanics and bodyworkers unions. At press time, the unions had begun picketing Dominion.

Another Lakehead dealership, Port Arthur Motors, has fared slightly better according to its general manager, Gerry Kirk.

"We're about the same this year," he said in a telephone interview.

"A lot depends on the strikes," Kirk said. "It (sales) is not going to improve unless the unions go back to work."

Labor relations are also affecting Sault Ste. Marie auto sales.

Officials from two GM dealerships pointed to the contract negotiations at Algoma Steel Ltd. as the main reason for for a reduction in sales.

"It's a contract year at Algoma and the GST has put an unnecessary fear in consumers' minds," said Jack McDonald, general manager for Boston's Ltd.

However, he noted that consumers are apparently waiting for the imposition of the proposed Goods and Services Tax before making an auto purchase.

"The government is trying to get the public to purchase cars after Jan. 1 by saying the GST will reduce the price," McDonald said.

According to McDonald, General Motors is attempting to bolster sales levels by offering $800 cash rebates to buyers.

McDonald and an official with Prouse Pontiac Buick say sales figures were down between 10 and 15 per cent by the end of June. The official with Prouse, who declined to give his name, said interest rates have also hurt sales during the past few months.

"People could wait until next year to buy because the 12.5-per-cent federal tax will be removed and a lesser amount will be put on," the official said.

Of the 1991 models, most of the officials interviewed pointed to the Cavalier, Camaro and Caprice as the likely popular models.

"The Caprice has been completely remodelled," said Evans, "and the Camaro is already doing better for us than it has the last few years."


Some dealers are also expecting that anticipation of the GST will hurt leasing figures during the latter portion of the year.

"It's (leasing business) going to be very scarce the next six months," he said.

However, Doug Murdoch, manager and owner of Tilden Rent-A-Car in Kirkland Lake, disagreed with McDonald's estimation of the GST's impact.

"People are going to be upset at first, but I don't think in the long run they're going to stop renting cars," he said.

Murdoch said the leasing industry should escape the new tax relatively unscathed because businesses can apply for a GST credit for the cost of leasing vehicles.

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Title Annotation:Auto Leasing Report; General Motors of Canada Ltd.; Northern Ontario
Publication:Northern Ontario Business
Date:Aug 1, 1990
Previous Article:Marginal sales increases reported for imports.
Next Article:Chrysler's sales, leasing figures match 1989's; dealers optimistic.

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