Auto sales are down for the Chicago area, but domestic car dealerships have been hit harder than foreign car stores.

The Chicago area is experiencing a mild decline in the overall auto market for 2007. The “Chicago Auto Outlook” predicts that new vehicle registrations will be down 2.9 percent in 2007 when compared to 2006.

Yet while the overall market is down, the majority of losses are in the domestic brands while foreign or import models are faring much better.

“It’s nice to have a franchise that’s doing something,” said Don Davis, general manager for Valley Honda Naperville Aurora. “In 2006 we had a 62 percent increase in sales over 2005. We are looking at a 30 percent increase this year.”

At the end of the first quarter 2007, domestic brands held 40.4 percent of the Chicago market, compared with 45.9 percent nationwide. The top two manufacturers in Chicago during that time period were Toyota and Honda, accounting for 14.9 percent and 11.9 percent of the market, respectively. Coming in third was Chevrolet with 10.7 percent of the market.

Through March 2007, eight of the top ten selling models in the area were from Japanese manufacturers. The remaining two were from Detroit-automakers.

The Big Three have lost their stronghold on markets nationwide, where they once were the overwhelming dominant choice of U.S. auto-buyers. Of course, 25 years ago Ford, General Motors and Chevrolet were only worried about competing with each other.

With a flood of Asian and European auto manufacturers entering the market in the last 15 years, competition has become that much tougher.

And it also seems that a large number of consumers perceive imports as a better buy.

“The challenge for the Big Three is to get potential customers back into the showrooms,” said Jerry H. Cizek, president of the Chicago Automobile Trade Association.

In the Chicago market, the option is there, yet the consumers are not following through. Domestic dealerships outnumber foreign dealerships in the area by two-to-one in some cases.

The CATA lists 70 Chevrolet and 64 Ford dealerships as opposed to 28 Toyota dealerships in its northern Illinois and northwest Indiana coverage area.

Cizek said that natural attrition will eventually have to occur to get the numbers in line, but what that could mean is a trend where fewer dealers end up owning more dealerships.

“I think we will see more dealerships being controlled by fewer dealers in the future,” he said.

Another growing trend is that dealers are beginning to work with both foreign and domestic models. The dealerships are separate, but dealers will be able to cater to a larger consumer audience and spread out risk.

Jack Phelan Chevrolet is a family-owned operation that began in 1970 in Lyons. In 2005 the dealership acquired a Dodge, Isuzu and Suzuki dealership in neighboring Berwyn. Owner John Phelan said that it was really an acquisition of convenience, but it is becoming more common for dealers to work in both foreign and domestic.

“I don’t think you will see domestic and imports under one roof, but you will see individual dealers adding to their portfolios,” he said. “That way you can cover all of your bases.”

Phelan has said that sales have been good at both of his dealerships, but acknowledged that his example may not be a good reflection of the area market.

“I have customers who bought their first car from us and now bring in their grandchildren to buy a car,” he said. “We haven’t seen a downturn.”

Michael Ettleson, principal dealer for Ettleson Cadillac-Buick Inc. in Hodgkins and Ettleson Hyundai LLC in Countryside, has seen a difference in sales of domestic brands in the last few years.

“I can see that our sales in numbers of Cadillac and Buick have gone down as opposed to a few years ago,” said Ettleson. “A few years ago we sold 60 Caddys a month, now it’s around 45.”

However, the Hyundai sales have been steady in the down market.

“Korean manufacturers are in a growth pattern,” he said. “They are trying to compete with and do as well as Nissan and Toyota. They are trying to move 500,000 units a year. Last year they hit around 450,000.”

Ettleson said that consumers’ perception is that foreign brands get better gas mileage. Now that gas prices are high, many potential buyers bypass the domestics and head straight for imports.

“When gas prices climb up fast people perceive that Hyundai models get better mileage,” he said. “There is somewhat of a perception that import and foreign models have better quality.

“I think the main reason people chose foreign is that they have had good luck in the past and the domestic providers have not given them a reason to change. There needs to be a specific price advantage and Detroit can’t seem to provide that right now.”

However, Ettleson said that despite the perception, domestic manufacturers are producing models that match up with the foreign competition.

“We get a lot of questions about gas mileage,” said John Phelan. “Chevy can match up with what manufacturers like Toyota are importing.”

Phelan said that while domestic manufacturers haven’t lost any quality, they have lost many customers simply because there is so much to choose from today.

“In the 1970s you had the Big Three and that was it,” said Phelan. “Now the vehicle pool is so much larger. The choices are much more numerous.”

Today consumers look for the best deal rather than being swayed by national loyalty or any sense of patriotic duty.

“The consumer base that was strictly loyal to American manufacturers is shrinking,” said Ettleson. “Many have either died or don’t drive anymore.”

However, Phelan believes that the market will turn around again and domestic automakers will fare much better in the near future.

“I think you will see a lot of their business improve now that the UAW (United Auto Workers) strike is settled,” said Phelan. “They can relieve themselves of a lot of costs that have been handed down for decades.

“The future of the business will depend on what they do with non-traditional fuel sources and how they steer away from foreign oil. GM has done the best with fuel cells.”