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Election-time woes deter spending

Liz Hochstedler, Associate Editor
October 31, 2012
Filed under Features, Top Stories

Dealers hopeful that slump will end soon

While Barack Obama and Mitt Romney are debating on TV, customers are debating whether or not they feel secure spending their hard-earned money.

Presidential election seasons are always a time of unease. No one knows who will be leading the country in a few short months and what policies the incoming president will enact. And this uncertainty affects customers’ buying habits.

“With presidential elections, it seems like for two or three months before the election, it’s, ‘If this person wins, we’re screwed;’ ‘If this person wins, we’re screwed.’ There’s a big, ‘What if? What am I going to do?’ This creates a big unease with consumers,” explained Steve St. John, owner of Dreyer Honda South in Whiteland, Ind., south of Indianapolis.

Nearly three quarters (74 percent) of the 191 dealers surveyed by Powersports Business and RBC Capital Markets on third quarter performance reported they are “significantly more concerned” or “somewhat more concerned” about the U.S. political environment compared to a few months ago. That’s an increase from Q2, when 68 percent reported the same.

Though all presidential elections find opposing parties jockeying for position, dealers say the 2012 election is even more contentious than those in previous years.

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“People are more polarized,” said Butch Miller of Honda Polaris of North Texas in Sherman, Texas. “They either love what’s going on, or they absolutely spit, cuss and throw things.” Customers seem most concerned about unemployment, taxes and the economy in general, the dealers reported.

“I’ve got people walking through the door saying they’re not going to do anything until the election’s over,” said Aaron Sellers, general manager of Pelham Powersports in Pelham, Ala. “They’re concerned that the job market is going to continue to get worse, that their taxes are going to get raised.”

Dealers are concerned about the same things themselves and how each presidential candidate affects their businesses.

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Sellers is worried about how the Affordable Health Care for America Act, also known as Obamacare, will change his business operations if it goes into effect in 2013-14.

“There’s some stuff in there that is going to hurt small businesses, especially one as small as us,” he said, adding that other current policies are unfriendly to small business.

St. John is worried about taxes and regulations. One regulation that especially concerns him is a tax that he says the Environmental Protection Agency wants to put on coal. His dealership and many other businesses in the Midwest rely on coal for energy, and he expects his utility costs to increase 40 percent over the next few years if the regulation continues.

“The government needs to quit spending money and get out of the way of businesses,” he said.

Miller says his business has been overtaxed federally and locally and has been buried in debt.

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“Our sales are way, way off. We’re doing about 20 percent of what we were doing 12 years ago,” he said, adding that his area has lost about 12,000 jobs over the last seven or eight years.

If Obama stays at the helm of the country, Miller will likely close his dealership. Other survey participants reported the same.

“I’m going to mail the bank the keys; we’re done,” Miller said. “When you lose 80 percent of your sales, it’s very difficult to even hang on, and we’ve been here for 20 years.”

He admits that he’s unsure what Romney would do in office, but he’s confident he’ll see a boon in sales if the Republican is elected.

“I think if they change the control of the Senate and the White House over to the Republicans, I don’t know if they’ll do a good job, but I think people will at least be thinking, ‘We’re rid of these guys,’” he said.

Though Sellers is an independent politically and has seen good sales years under both Democratic and Republican leadership, he believes Pelham Powersports will have a better Christmas if Romney leads the administration.

“If there is some change, there will be a consumer confidence lift instantly,” he reported.

St. John also believes a change in leadership would create optimism and stimulate spending, but he has learned from experience that no matter which candidate is leading the country in January, customers will return to their regular habits soon.

“Right now everyone is kind of in a flux of let’s wait and see,” he said.

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