Sacramento-area car dealers said the abysmal September U.S. auto sales figures were no surprise to them, and all local dealerships are tightening their belts and hoping for a loosening of credit.

"We expected everybody to be off this month, and the numbers certainly met our expectations," said Rick Niello, president of the Niello Co., which operates 13 foreign auto dealerships in Northern California.

"Most of the (dealerships) in Northern California are down," said Katina Rapton, general manager of Mel Rapton Honda in Sacramento. "We're actually up 3 percent overall compared with last year, but last month was a tough one."

Rapton said her store at 2820 Fulton Ave. sold 97 vehicles last month, down from 140 in September 2007.

The auto industry's struggles also hit Richmond, Va.-based CarMax Inc. On Wednesday, the company said it is laying off more than 600 employees, or about 4 percent of its work force, including 23 employees at CarMax's Roseville site.

CarMax spokeswoman Trina Lee said all the laid-off Roseville employees worked in the service operations unit, which reconditions cars for sale. Last week, CarMax said its second-quarter earnings plunged 78 percent due to a weak economy, high gasoline prices and losses in its financing arm.

The key to the decline of new car sales: credit.

Credit not only enables most U.S. consumers to purchase automobiles – only about 5 percent to 15 percent of new-vehicle buyers pay in cash, depending on the average cost of a given dealership's inventory – it allows dealerships to manage inventory.

"When credit dries up, dealerships that are not well-capitalized are going to be in trouble," Niello said. "And if they don't have access to capital markets, you know what happens. They go out of business. That's what's happened (locally) and all over the country."

Niello said dealerships that have sound relationships with so-called captive finance companies – financing divisions of individual automakers – are in relatively good shape.

David A. Rodgers, senior vice president and general manager of the local Sullivan Auto Group, said the group's long-standing relationship with Toyota Financial Services has worked to the advantage of Sullivan's Roseville Toyota-Scion store in the Roseville Automall.

"Our relationship with Toyota Financial Services has been outstanding, and they've been loyal with us," Rodgers said. "I think the bigger problem has been for (dealers) with Bank of America or Wachovia and other banks. They've really suffered."

Rapton and Niello said they were alarmed to see the number of area customers with good credit scores struggling to be approved for car loans.

"The difference between being approved or not doesn't make sense a lot of times," Rapton said. "There used to be some room for us to maneuver to help, but with the way credit is now, there's no room."

Niello said he hopes congressional approval of a federal bailout package will eventually loosen up credit, but he said a return to normal might be a slow process.

"Even if it's approved, credit is probably not going to be as flexible as it was six months ago, but I can see it eventually getting back to a more-normal market that's more in line with risk," he said.

The tighter credit and slowing sales mean dealerships are tightening up their own operations.

"We've been watching our balance sheets and keeping inventory in line," Niello said. He said the high-end foreign brands that are Niello's bread and butter are holding up during the economic downturn.

Rapton said she, too, has her eye on the bottom line.

"We're an extremely well-capitalized dealership, but we are not giving raises, we're cutting out unnecessary expenses and out of 170 employees, we've only laid off four," she said.

Call The Bee's Mark Glover, (916) 321-1184. Bee staff writer Darrell Smith contributed to this report.