CHEVROLET TO DEALERS: DON'T OVERREACT OR YOU COULD FACE ORDERING WOES

Dealers should not overreact to early indications sales will grow more sluggish with the U.S. preparing to launch a prolonged military campaign against terrorism, says Kurt Ritter, Chevy marketing general manager. He says he doesn't want dealers to cut orders so drastically that inventories drop too low to handle consumer demand.

“With things as unsettled as they are (dealer ordering) is all over the map right now,” he says. That ranges from dealers who “don't want to order anything” to dealers who are ordering aggressively.

Those ordering with confidence “will do OK,” says Mr. Ritter, while timid dealers who wait too long to see how it all plays out are “probably going to be in trouble.”

He adds, “I think we're going to have to wait 30 days or so to get a better handle on this and see how things sort out. When some of the emotion begins to subside, people will begin to take stock in what has changed in terms of their material wealth, outlook and confidence.”

Initial sales and consumer data isn't encouraging. Sales dropped more than 25% on the days following the Sept. 11 terrorist attacks compared to year-ago and tumbled 42% Sept. 14, vs. like-2000.

“Unless we become involved in an extended land war, the U.S. economy is likely to be expanding once again by the first quarter of 2002, and sales of new light vehicles will stabilize at about 16 million units,” says Van Bussmann, senior vice president of Global Forecasting at J.D. Power. He says long-term sales will not be noticeably affected.

Mr. Ritter believes Chevy dealers are equipped to handle a downtown with products in most market segments, three nameplates among the top 10 sellers (Malibu, Cavalier, Impala), and a strong debut for the new Avalanche.

General Motors and Ford both announced 0% financing programs for October. Also, the effects from the recent tax cuts and rate cuts have yet to be felt.

Dealers could have problems managing inventory. Orders have already been placed for the vehicles from the new model year and those can't be shipped back.

Some analysts fear that declining car sales could mirror the drop seen during the Gulf War when car sales numbered 12.3 million.