Local auto dealers, who were among those first hit when the economy plummeted in 2008, say they’re now seeing a slow shift toward recovery.

Car dealerships witnessed some of the worst the recession has had to offer over the past two years, their profits dipping as unemployment rose and credit markets froze across the nation.

Between the Cash for Clunkers program and the bankruptcies of some of the auto industry’s biggest hitters, it’s been a temporarily booming but mostly bust year for local auto dealers.

With monthly sales reports that are better — though barely — than a year ago and the promise of a new year just around the corner, local auto dealers are optimistic that their big-ticket sector of the retail industry will soon repair itself.

“Improvement will more than likely be gradual, but many dealers think the market is headed up in 2010 — maybe as much as 11 to 12 percent,” Vicki Fabré, executive vice president of the Washington State Auto Dealers Association, said in an e-mail.

With new vehicle sales in the state down nearly 20 percent in 2008, dealers have a long way to go before they reach the booming car sales of a few years ago.

“Traffic and sales have stabilized at a level that is quite a bit less than it was in ’07, ’06 and ’05, but it’s nice to have something that looks more stable,” said Mike Blade, owner of Blade Chevrolet in Mount Vernon.

The Clunker effect

Sales over the last year have been anything but predictable, ranging from “the dark days” of last winter and spring to booming car sales over the summer during the short-lived Cash for Clunkers program.

Set up to boost the most depressed U.S. auto sales in a quarter-century, the program burned through $3 billion in federal dollars to fuel new car purchases by buying up drivers’ old “clunkers.”

“Cash for Clunkers was just insanity. It was more traffic than we’d seen even sometimes in the good ol’ days, so it’s dropped off appreciably since then,” Blade said.

Fabré said auto dealers considered the program a success in boosting sales, though only temporarily. Auto dealers have reported that sales have returned to “pre-Clunker” levels since the program ended.

But that’s better than the number of sales at dealerships around this time last year, dealers say.

Pam Nelson, owner of Foothills Toyota in Burlington, said Foothills’ sales in October and November were up over the same months in 2008, which is when the downturn first began to hit her business.

She said sales, which had been off about 35 percent in 2008, began to improve near the end of 2009.

“I feel we’re trending upward ever so slightly,” Nelson said.

Nelson did see growth over the past year in one aspect of Foothills’ business — the service department. Though the trend means drivers might be holding onto their old Toyotas a bit longer, Nelson said it helped to have money flowing through the business once new car sales had dried up.

Incentives

This year, government funding and car makers are taking risks to push extra inventory off dealers’ lots before 2010.

The end-of-year draw for consumers to consider buying a car might be even stronger this year, said Rick Wilson, a director for Washington State Auto Dealers Association and owner of Wilson Motors in Bellingham.

A stimulus incentive that allows buyers to deduct the sales tax on their vehicle purchases will expire Dec. 31 unless extended by Congress.

“That’s definitely a savings we can guarantee now and we certainly can’t guarantee in the future,” Wilson said.

Car makers are revving up their usual year-end sales with some creative tactics this year, as well.

General Motors, for example, is offering an “unprecedented” 60-day test drive that includes a full refund if the vehicle is returned with less than 4,000 miles on it.

“That’s quite a bit of a commitment on the part of General Motors,” said Blade, who sells GM products. “If someone were to drive 3,000 or 4,000 miles and bring it back, GM is taking a huge financial hit. They’d have to sell it used.”

He said that’s a risk GM is willing to take to change perceptions about the company’s products in light of its recent bankruptcy.

Nelson said Foothills is running its annual Toyotathon to push inventory off the lots.

Adam Thurmond, finance manager at Jerry Smith Kia in Burlington, said the Kia brand has proved over the last year that it’s well-positioned to succeed during a down economy.

“We’ve actually had a pretty good year, all things considered,” he said, citing the long-term warranties and affordability of Kia vehicles as reasons.

Thurmond said though business at the start of December hasn’t been “explosive,” he expects a strong second half for the month and continuing into 2010.

Blade said he’s still holding out for the day that employers begin hiring and banks begin lending again. If that happens, he says he’s confident that 2010 will be a better year.

• Whitney Pipkin can be reached at 360-416-2112 or at .

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