International Auto Dealer's Assn.: 1998 Auto Industry Year in Review

16 December 1998

FOR IMMEDIATE RELEASE	



A YEAR-END LOOK AT THE EVENTS SHAPING THE
AUTO INDUSTRY IN ?98

WASHINGTON, Dec. 10, 1998 -- 1998 will likely go down in
history as a year of wide swings in automotive retailing,
according to a feature story in the latest issue of AIADA's
SHOWROOM magazine.  Here is a look at the significant
events which shaped this landmark year in the 
auto industry:

Republic Industries: Republic Industries became the
largest dealer group in the U.S. seemingly overnight.  This
confused everyone -- dealers and manufacturers alike --
resulting in a flurry of lawsuits.  Manufacturers accepted that
dealers should be able to sell their stores to public
companies and that consolidation is going to happen.

DaimlerChrysler: The merger between these two
automakers caught the industry by surprise.  "The merger
has pushed the confusion meter back up this year," says Al
Wagner, former senior vice president of dealer relations at
Toyota Motor Sales, U.S.A., noting that dealers wonder what
they will gain.  "But the merger solidifies the fact that the auto
industry has gone global." 

Auto Leasing:  A few years ago when leasing was taking
off, banks and finance companies placed residual levels
sky-high.  Now after two or three years, the industry is
finding that these vehicles are not worth what they're
supposed to be worth, and as a result the leasing business
has slowed down.  

Auto Sales:  Buying a car has been a good deal for
consumers this year.  The reason is two-fold: indiscriminate
use of incentives and insane financing terms.  "Before cars
are in the showroom, some $2,000 in cash-back incentives
are being advertised," Wagner told SHOWROOM.
	
REITS: Despite the challenging capital markets, Capital
Automotive REIT continued to grow steadily following its IPO
in February.  At the end of the third quarter, 75 percent of
Capital Automotive's properties were located in the top 50
automotive markets, and 65 percent of its annualized
revenues were derived from tenants who are among the top
100 dealer groups in the country.

CarMax: 1998 has been a slow growth year for CarMax. 
The used car superstore had planned to open 15 to 20 stores
annually, reaching 80 to 90 stores by 2001. But the profit
picture has not been bright for CarMax.  CarMax recently
reached an agreement with Nissan Motor Co. to sell new
Nissans at CarMax locations. 

Truck vs. Car Sales: November 1998 marked the first time
since the end of World War II that trucks outsold cars in the
U.S.  Automakers -- especially GM and Ford -- have tilted
their advertisements toward trucks and car ads have been
scarce.  "I think a lot of dealers are concerned about how
they?re going to sell cars without national advertising
support,"  Wagner told SHOWROOM.

Auto Retailing and Wall Street:  Auto retailing's status as
a Wall Street darling was short-lived.  The 12 retail groups
that are publicly traded have ranged from highs of $39.50 to
lows of $3.25 in the last year.  "I think analysts are quite
disillusioned about the industry's lack of sophistication and
find the peaks and valleys confusing," says Wagner.

Virtual Dealerships: There has been a great deal of concern
among some auto retailers that online car-buying services
will take sales away from the dealership.  To combat this
latest trend, analysts suggest dealers concentrate on
training dealership personnel to meet the needs of the
better-informed consumer.
	
Despite all the twists and turns the industry has experienced
this year, dealers have profited greatly, taking advantage of
improved products and services and consumers have
benefited from the incentives and great financing deals.
	
For more information, see the November/December issue of
AIADA's SHOWROOM magazine. To subscribe, call
1-800-GO-AIADA.  SHOWROOM is the official publication of
the American International Automobile Dealers Association
(AIADA).
	
AIADA is the trade association representing America's
10,000 retailers of international nameplate vehicles. The
association works to preserve a free market for international
automobiles in the U.S. by advocating this mission before
the federal government and is dedicated to increasing public
awareness of the international automobile industry's value to
the  American economy.

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