Auto dealers given a boost

Three auto dealerships in Healdsburg stand to benefit from $100,000 the city is contributing to an advertising campaign to stoke car sales.

For the second year in a row, the city's Redevelopment Agency is spending $100,000, matching the auto dealers dollar per dollar to create a $200,000 economic development campaign.

The money will be spent on billboards, newspaper, radio and television ads to help stimulate Healdsburg's car sales.

Like Detroit's Big Three automakers, which are seeking a multi-billion-dollar federal bailout, Healdsburg's auto dealers have struggled with a steep decline in sales.

Sanderson Ford, McConnell Chevrolet-Olds and Silveira Pontiac-Buick-GMC, offer nine American brands between them.

Car sales are down in general, but domestic car manufacturers have been especially hard hit with the consumer shift from SUVs to more fuel-efficient models.

"Given all the news and stress put on the domestic auto industry -- especially small dealers in rural communities -- working together to ensure our combined survival is imperative," said Bruce McConnell, of McConnell Chevrolet. "And the city of Healdsburg recognizes that."

The ad campaign administered by the Chamber of Commerce promotes "Healdsburg auto dealers" as a whole and not the individual dealerships, which have their own separate promotions.

The idea is not only to reverse a six-year decline in sales, but to keep the dealerships from closing.

"Our original goal was to reduce the decline, to stabilize that," said City Manager Chet Wystepek. "Conditions have gotten a lot worse over the past year. We want to have them be successful enough that they can remain open and survive -- at some point able to thrive again."

Since 2002, sales for the Healdsburg group have steadily declined each year.

The city, like most others in the state, collects a 1 percent tax on automobile sales.

In 2002, the tax Healdsburg collected for new and used vehicles peaked at $854,621. Since then, it's declined every year, down to $533,724 collected at the close of the 2007-08 fiscal year.

Most of the tax comes from the trio of dealers on Healdsburg Avenue, although some is derived from Opperman and Son, which sells specialized trucks.

The city has a strong interest in robust auto sales tax collections, since the money goes directly into the city's $7.1 million general fund, almost all of which goes to pay for police and fire services.

City Council members, acting as heads of the city's Redevelopment Agency, had no hesitation in allocating the $100,000 this week.

"You always have to ask, should you be interfering with private enterprise," said City Councilman Gary Plass. "But when you look at the whole totality of the situation and historically what the dealerships have meant to the community, I support it a hundred percent."

The Redevelopment Agency also subsidizes lodging industry ad campaigns at an even greater rate, contributing two dollars for every one spent by the hoteliers. The city's contribution is capped at $150,000 annually, though the actual amount spent has been much less, according to Wystepek.

The rationale is that the city gets a financial benefit from bed taxes, which go mostly to park and recreation programs.

But the car dealers hold a special place in town.

"We've had car dealers here for a long time. Before we became a tourist community, they were part of the backbone of the economy, the fabric of the community," Wystepek said.

While Detroit has been slow in reacting to changing consumer preference for hybrids, McConnell said there is "light at the end of the tunnel" with new models, such as the 100-miles-per-gallon Chevy Volt coming in late 2010.

"We feel we have closed the quality gap. Now we have to close the perception," he said.

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com.