Wichita car sales a bright spot in sluggish economy
10/07/2012 7:24 AM
10/07/2012 7:20 PM
While most of the U.S. economy hiccups along, car sales continue to show impressive gains – including here in Wichita.
Local dealers say they’ve seen an increase equal to or greater than the rest of the country in overall car sales.
“We’re seeing an upward trend,” said Sean Tarbell, new car general sales manager for Davis-Moore Automotive, which sells Nissan, Jeep, Dodge, Ram, Chrysler, Lincoln, Chevrolet, Mazda and Fiat.
“September was a little softer than what business has been, but we’re on pace to have the best year we’ve had in a few years. We’re not back to 2007 levels yet, but we seem to be heading that direction.”
Total U.S. car sales rose 13 percent in September, compared to September 2011, to nearly 1.2 million. Analysts think sales could hit 14.3 million for the year, compared to 12.8 million in 2011.
U.S. auto sales peaked in 2005 at 17 million, and they hit a 30-year low of 10.4 million in 2009.
“We went through this (downturn) for so long, it’s kind of the new norm,” said Les Eck, owner of Rusty Eck Ford and Eck Automotive Group. “People are like ‘Hey, I need a new car. They get better gas mileage, interest rates are low. Why not? I deserve it.’ ”
The hottest times of the year for car sales are generally March through August and the week after Christmas, Tarbell said.
Davis-Moore Automotive saw sales of new and used cars increase by about 15 percent, September to September, Tarbell said. He said the dealership sold about 6,000 new and used cars last year and is on pace to exceed that number this year.
New products and technology are the leading contributors to increased car sales for Ford, Eck said.
“We’ve seen an increase and all of that’s product-driven,” Eck said. “It’s a good time to be a Ford dealer.”
He said Rusty Eck Ford has seen a 20 to 30 percent increase in new and used car sales from last year, and in a typical year the dealership sells about 6,400 cars, about 3,400 of them new.
“There is so much new product out there Cars are the second highest priced item that you own, but they’re going to sell,” Eck said. “It’s their personality. It’s their mojo speaking, and they like having the latest, greatest cool thing.”
The average age of cars on the road is nearly a record 11 years, and some dealers say they’ve seen more people come in who just need to replace their vehicles because they have delayed making big purchases.
“Honestly, I think people have put off purchases for so long they really do need a new vehicle,” said Scott Hatchett, president of Scholfield Buick, GMC and Hyundai.
“Trade-ins from a few years ago had high mileage around the 100,000 mile threshold, but those have gone up drastically to 150,000 to 200,000 miles on them,” Hatchett said. “I’m unable to keep most of those, and I wouldn’t want to resell them since it’s probably a risky proposition.”
Hatchett said GM sales are up about 4 or 5 percent, but Hyundai sales are up about 15 percent, September to September.
So far, the dealership has sold about 3,000 new and used vehicles this year.
Nationwide, import models saw bigger gains than traditional U.S. automakers in September, but some of that reflects manufacturers, such as Toyota, that were still struggling to recover after Japan’s earthquake and tsunami in 2011.
Dealers say electronics within cars are of growing importance to consumers, especially features such as Blue Tooth, apps and touch screens.
“We thought in all the studies that we did that it was going to be the younger generation that wanted this technology,” said Brandon Steven, owner of Brandon Steven Motors, which sells Toyota, Suzuki, Subaru and Ford. “But all generations are wanting this technology. It’s pretty exciting.”
Steven said he sells about 3,000 new and used Toyotas a year, and about 65 percent are new.
This year looks to be a strong one for Toyota. He said sales were tracking up by about 40 percent from last September, and he could be on pace for the biggest year his dealership has ever had.
Overall, his dealerships are on pace to see a 31.5 percent increase this year, he said.
High fuel prices
Rising gas prices also are influencing the kinds of vehicles that are being sold.
While pickups had been selling well earlier in the year, cars have been more popular in more recent months, according to national sales figures.
Wichita dealers have seen the change in the market mix as well.
GM is putting a large emphasis on fuel economy for its 2014 models, which will be introduced next year, because of consumer demand, Hatchett said.
“The biggest mover in our sales is gas,” Steven said. “When gas goes up, we sell small cars and vice versa When gas goes up, we run out of Priuses.”
A combination of tight pockets and the Internet have made consumers shop around and compare deals online.
“The consumers are better informed, but that’s a good thing, not a bad thing,” Tarbell said. “Even from a dealer’s perspective, that’s a good thing. They’re doing their research online. When customers come in now they have a pretty good feel for what you have on the lot and what they’re interested in. Sometimes that changes after they see the product, but typically they’ll stay true to that course.”
Steven said many customers go online and get information on prices to compare across makes and models.
“Two or three years ago, you couldn’t get all that information in one stop,” he said. “Now you can do that and can go pick the car out, so it’s more about the experience.”
“Now customers are more demanding about service after the sale. They’re more concerned about it than they used to be about three or four years ago about what their maintenance costs are going to be for the next two or three years.”
Low loan rates
Sales of vehicles also have been helped by historically low interest rates.
“They’re ridiculously low now,” Tarbell said, “so I do think it makes it easier for people who might have been thinking used; they’re are now thinking of a new car because rates are so low.”
Some manufacturers offer zero percent interest rates for buyers with good credit.
“The average payment today is less than what it was two years ago, and the reason being is the interest rates,” Eck said.
But Steven doesn’t think that low interest rates bring people into a dealership.
“Factories have always had incentives with cars,” Steven said. “Their job is to make sure that the rates are low with the cars. Right now I have nearly zero percent on all Toyota models, and it’s been that way for a long time. I just don’t think people buy a car because of interest rates.”
Contributing: Associated Press
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