For many auto retailers, the latest economic slowdown has been unlike any other. At a time when Detroit's big auto makers are scrambling to
slash costs to rebuild razor-thin profit margins and are watching their stocks get hammered on Wall Street, many car dealers are prospering, according to the Wall Street Journal.
With auto makers pumping money into the costly promotions that have consumers thronging to dealerships, retailers are enjoying some of their best years ever, the Journal reports. The divergent fortunes of car dealers and car makers add up to a striking anomaly of today's shaky economy.
In past downturns, when car makers saw demand sliding, they cut production and even, in some cases, scaled back discount deals to ride out the storm. Car dealers suffered along with the factories.
Dr. Paul Taylor, chief economist for the National Automobile Dealers Association (NADA), notes that the manufacturers' zero percent deals in the fourth quarter last year not only drove business to a record month in October, but left little costly inventory, helping boost profits further. Taylor expects the profit-inventory equation to hold for July and August this year as well.