Sales are still down, however, and Rick Morrison, owner of Morrison Auto Group of Anchorage, blames that on the constant 24-hour hammering of bad economic news that has dampened consumer confidence here as well as elsewhere. That’s despite the state’s economy being in relatively good shape and credit being available for most buyers.

Morrison and Lithia Motors’ Troy Jarvis told members of the Anchorage Chamber of Commerce Jan. 5 there are sharp declines in sales and revenues nationally for the auto industry, but Alaska dealers are faring better.

Jarvis said there are even upticks in sales of some brands and models, like SUVs and trucks now that gasoline prices are lower.

Both said - no surprise - it’s a great time to buy a car. Morrison said the combination of manufacturers’ incentives and good credit terms available through Alaska financial institutions make for some incredible deals.

“We’re selling our cars for the same price we did 10 years ago and the product has improved a lot,” Jarvis said.

Jarvis ticked off the numbers for Lithia, comparing sales and revenues for the company’s five Alaska locations to 80 locations in the Lower 48.

Revenues are down 12 percent among Alaska outlets compared to 35 percent among Litha’s out-of-state outlets, Jarvis said. Sales of new cars are down 21 percent in Alaska compared to 27 percent nationally, but used car sales are up 1 percent, he said. Parts and service sales for Lithia’s Alaska outlets are up 5 percent.

It’s a mixed picture but the downturn in new car sales hurts because those provide about 70 percent of the dealer’s overall profit margin.

“You can’t pay the bills just with sales of parts and service,” Jarvis said.

The decline in sales will have some effects on jobs among Alaska car dealers. Still, Morrison said the national downturn has had a silver lining for him - he’s attracted some highly trained technicians for jobs with his company that were previously tough to fill.

Lithia is actually bullish about 2009 in Alaska, Jarvis said. The company projects 10 percent growth in sales this year. There may be some reduction in personnel at Lithia but if the sales target is met those people will soon be back to work.

Morrison said he’s been in the auto business for 35 years and has never seen a situation like now.

“The term is over used, but it really is the perfect storm that started with the subprime mortgages and the meltdown in housing, which triggered a chain of events rolling through credit markets and now to manufacturing, like the auto industry,” he said. Gas prices at $5 a gallon earlier this year didn’t help.

Nationally, the auto industry expects a 40 percent decline in sales, from about 17 million autos sold a year to about 10 million expected this year. U.S. auto manufacturers are seeing some of the biggest declines but sales of imported cars are down as well, Morrison said.

The effect of reduced manufacturing is now beginning to ripple through the national economy. Parts manufacturers and suppliers are now feeling pain, likewise steel manufacturers, Morrison said.

For all the criticism being leveled at U.S. car manufacturers, the “big three” of General Motors, Chrysler and Ford still sell more autos worldwide than foreign manufacturers, he said. Changes are needed in the industry but companies like General Motors are like huge ships, in that it takes time to change course.

General Motors, however, now has a plan that should make it profitable in a national market where only 12 million cars are sold. The question is whether the company can hang on long enough to put the plan into effect, Morrison said.

The freeze-up in credit markets is affecting financing for restructuring as much as for auto sales. This is why the federal “bridge-loans” given the U.S. companies are so important.

What’s different about the help being extended to the auto industry compared to bailouts for banks and mortgages is that these are loans, and they must be paid back.

Morrison said he just returned from a trip to Washington, D.C., with other auto dealers to lobby for the financing plan.

“It’s scary how poorly all this is understood in Congress,” he said. “There are those who say the big three auto manufacturers should just be allowed to go bankrupt, but the loss in sales would be a catastrophe. Surveys show that 80 percent of consumers say they would not buy a car from one of the companies if they file, out of worries over warranties and service.”

The Chapter 11 bankruptcy protection would quickly become a Chapter 7 liquidation, and the economic ripple effects would be significant. Foreign manufacturers don’t want to see the U.S. companies go bankrupt either, because the adverse effects on parts manufacturers and service companies would hurt them.

Morrison said he sees a rebound coming for the national economy.

“The foundations are being set in place. Capital is now being invested in banks, interest rates are at record low levels, there’s a boom in refinancing and oil prices are down,” he said.

The nation has seen tough times before but Americans have become too comfortable after 15 years of uninterrupted economic growth, he said.