About 100 people have turned in paperwork to City Hall so they can receive the gift cards, officials said.
The City Council voted in early May to use $400,000 of public money for 800 gift cards in a bid to keep afloat Tracy auto dealerships, which generate sales tax money the city depends upon to pay employees. Sales taxes are expected to account for about $11 million of Tracy’s general fund in fiscal year 2009-10, and of that auto sales should make up about 15 percent.
All eight of the dealers in town said the gift cards have been a hit.
“It’s definitely got my phone ringing,” said Ray Malgradi, general manager for Tracy Dodge Chrysler Jeep. “Tracy Dodge couldn’t be more happy.”
Malgradi said the dealership has heavily promoted the gift cards in newspaper, television and Internet ads, and that he’s seen a 30 to 40-percent jump in business, or roughly eight to 10 new car sales, since the city began to give away the cards. The city has also devoted $100,000 for a marketing blitz, and a television ad has started to air.
Malgradi noted that more people have come from the Bay Area to buy than before the gift-card giveaway.
“That’s where my business has increased,” he said. “They’re coming in and buying.”
Other dealers echo Malgradi.
“We’re getting a real positive response from the customers,” said Dave Brown, the general manager at Tracy Mazda. “People seem to know about it.”
Brown said his dealership has poured money into ads he expects will lasso customers this Memorial Day weekend.
“Everybody’s looking to stretch their dollar these days,” he said. “The gift card is the icing on the cake to come buy a new car in Tracy. It has quite a bit of impact. If you’re on the fence about purchasing now, I think that’s a deciding factor.”
The city hopes so.
While Tracy anticipates gift cards could produce $200,000 in new sales tax money, plus a little more if people use the gift cards in town to buy things, that’s not the main goal.
With dealerships closing by the thousands around the country, including the Volkswagen and GM dealerships in Tracy, officials hope the gift cards will be a lifeline to allow dealerships here to survive the deepening recession – and produce sales tax money long into the future.
“At the end of the day, success will be that our dealers are here,” said Ursula Luna-Reynosa, head of the city’s economic development department.
•Contact Tracy Press City Editor Eric Firpo at 830-4223 or efirpo@tracypress.com.
I wonder if car sales could end up outpacing homes as the biggest generator of revenue during the slumping real-estate market?
Seems like a good idea to keep the engine finely tuned, so to speak.