The Sept. 11 terrorist attacks emptied car showrooms — especially in the Northeast.

“For the first week after Sept. 11 our sales dropped 40%,” says Brent Dewar, northeast regional sales manager for General Motors.

It even was worse for some dealers.

“My business was off 50%,” says Robert Maguire, chairman of the NADA and a New Jersey GM dealer.

Business in service shops also dropped abruptly, especially in Manhattan which was closed to incoming traffic for days following the attacks on New York's World Trade Center.

Something dramatic was needed to bring customers back to car dealerships. General Motors led the way with 0% auto financing.

Nobody was prepared for the boom that followed. GM's launch of zero percent financing drove a rebound in sales in the New York region and the rest of the Northeast. Volume was up 20% for the last 10 days of September, Mr. Dewar says.

R.C. Smythe, Ford's New York regional sales manager, says Ford sales also boomed following its adoption of 0% financing.

Mark Engelsdorfer, Northeast Business Center Director for Chrysler, says the same hold true for his company. But his New York sales territory was the last to recover from Sept. 11.

His region takes in nine states and a small part of Ohio, including Cleveland. The rebound was faster in the outlying parts of his region. What he calls the I-95 corridor markets were the last to recover with New York being dead last.

“The farther west you travel in the U.S., the better the business conditions are,” says Mr. Maguire.

But with 0% financing, people were crowding into showrooms. There were customers again interested in buying new vehicles. Dealers like Oasis Ford of Old Bridge, N.J. didn't feel it immediately.

“There was no immediate rush to the showroom,” says Ron Rosen, general manager of the family-owned store started by his father, Irving, in 1982. “But traffic built every day.”

It really took off in October.

“We sold 440 vehicles in October, 336 of those were trucks,” Mr. Rosen says. That was good enough to earn Oasis a trophy presented by Mr. Smythe to the dealer who sold the most trucks in the N.Y. region.

Oasis, the region's highest volume Ford dealership, grosses about $175 million annually. It has a 55,000 sq. ft. showroom from which it typically sells 275-300 Fords per month. Besides the trophy, Mr. Smythe presented the Rosens with 336 model trucks representing each real one sold.

Oasis contributed the models to Toys for Tots, which distributes toys to needy children during the holidays.

Ron Rosen says the Explorer and F-Series pickups were the top sellers in the month. “The reception for the Explorer was terrific after Ford added the third seat,” he says. “In fact, our Explorer sales never fell off.”

Tire safety concerns never slowed 2002 Explorer sales at Oasis. “It was good timing for the new model to come out,” he explains. “We were able to tell our customers it was a safer vehicle.”

What's more, safety issues even helped Oasis do more service business.

When customers brought their Explorers in to have tires changed, many accepted suggestions to have maintenance work, such as a 30,000 mile service check-up, performed on their cars. Others were persuaded to trade in vehicles with 70,000 miles or so, for a new Explorer.

“We made a positive out of it and overcame the negatives,” Mr. Rosen says.

Curiously, Oasis' Dodge dealership, a 25,000 sq. ft. separate store adjoining the Ford franchise did not do as well. Mr. Rosen explains that Dodge did not incentivize its vehicles the way Ford did. “That's why I'm off 25% in the Dodge store.”

Mr. Rosen lauds Ford because the company did not abandon its dealers, but has kept momentum going in the showrooms.

Despite the boost from 0% interest, Ron Rosen expects his Ford sales to only break even with last year when Oasis sold 3,800 new vehicles.

Dodge, however, will likely be off 25% for the year, Mr. Rosen forecasts. His used car business is also off. Prices are so low that he has stopped sending used vehicles to auction until prices recover.

Zero percent financing, while boosting new-car sales, has cut into used-car sales. (See page 26 for that story.)

Herb Reedman Jr., vice president of operations for Reedman Chevrolet and numerous other franchises in Langhorne, PA, says Sept. 11 silenced his showrooms.

“There was no floor traffic or phone calls,” he says.

But soon business picked up dramatically. His Chevrolet store led the way with October business up 63%. That represents 550 vehicles, 52% of them cars.

Reedman's business could have been even better if not for availability problems. There was only a 45-day supply of vehicles on average, although there was a 90-day supply of slower-sellers such as Cavalier. But Impala, Malibu, Trailblazer and a few other models had low days supply.

“I wouldn't like to ponder what would have happened without 0%,” Mr. Reed-man says. “We could have been down 50% in September.”

The Reedman enterprise, with sales exceeding $500 million annually, has seen its Chrysler and Ford franchises also boom because of free financing. And although leasing has become practically non-existent, used car sales were up 5% in October and 12% in early November.

For his dealerships, Mr. Reedman says the used car market is still very hot.

Mr. Reedman says the manufacturers have definite plans for year-end programs that will sustain momentum through the fourth quarter.

“My concern is for the first quarter of '02,” he says. He foresees a slowdown beginning in January, the time for typical inventory buildup.

For the entire northeast region where cars still outsell trucks, Mr. Dewar says the last 10 days of September were up 20% for GM dealers. The rebound carried into October which was up 49% overall.

Despite the fact that leasing dropped by half and new cars piled up on many dealer lots, it was an overall great month. The downside for consumers was a drop in trade-in allowances.

GM clearly wants to gain market share with the 0% program. And it seems to be working. Market share in the northeast region, which has 1,600 dealers from northern Virginia to Maine climbed by 1.5 points in October.

But it sits at 20% in the Northeast compared to 32% for GM in the rest of the country. Mr. Dewar says the disparity is caused by greater competition from imports in his territory.

Ford Motor Co. sales in the Northeast since the attacks also climbed, particularly in the New York region's 250 dealerships. Mr. Smythe says October car sales were up 96% and truck sales up 89%. The savings for both GM and Ford products can be up to $7,000 per vehicle depending on its MSRP.

Both the GM and Ford executives agree that the 0% financing has helped lower inventories.

GM had an inventory of about 200,000 vehicles in the region before the program took effect, Mr. Dewar says. This dropped 70,000 units because of the free financing. The Cadillac Escalade is down to a 15-day supply and other SUVs are below 30 days.

Mr. Smythe says Ford inventories are down to 42 days for trucks and 22 days for cars.

The Ford Escape has the lowest days supply now, dipping to five. The 2002

Explorer has less than 20. Ford sales for the rest of the year will be determined mostly by inventory, says Mr. Smythe. He adds that January and February will be inventory replenishment months in preparation for the spring sales push.

Mr. Dewar declines to say what incentives GM will offer after the current program is scheduled to end in January. Mr. Smythe says Ford has some programs in place for when its free financing offer expires, but says exactly what they will be depends on what the competition does.

Business was already softening in June and July for Chrysler, Mr. Engelsdorfer says. But it was generally good through Sept. 10. The next day precipitated a plunge of about 40%.

Chrysler weighed in late with 0% financing. When it did, sales accelerated. But the program did not immediately boost business in the five boroughs of New York City, Fairfield County, CT or northern New Jersey.

“New York did not feel the rebound until two weeks into October when business got hot,” Mr. Engelsdorfer says.

Overall Chrysler incentive costs are now as high as they have ever been, he says. The company plans to push dealer cash incentives and a new warranty program in lieu of 0% financing.

“We want to get out of 0% financing…and try to do that in a creative way,” Chrysler Group President Dieter Zetsche, tells Ward's Dealer Business.

Mr. Engelsdorfer says the cash incentives will benefit more customers. He says Chrysler sales are back to pre-Sept. 11 levels. What's more, late September and October sales helped reduce inventory. Chrysler's days supply now average about 110 days, a little higher for trucks.

The Chrysler executive expects sales to be significantly strong this month with the launch of the 7-year, 100,000 mile powertrain warranty.

The company is hopeful that such enticements will have a more lasting impact than 0% financing.

Mr. Dewar and Mr. Smythe agree that 0% is not sustainable for a long period. But it has been effective in pulling auto business back to somewhere near normal — especially in the New York region, which was hard hit. In more ways than one.