Can consumers expect better deals on cars and trucks this year?

The car business has had a great run, with seven straight years of record sales.

But what goes up, must come down — the big question is always when. That time might be now.

New vehicle sales hit their peak in December but have fallen three months straight since then, and most forecasters nationally are calling for a slight decline in 2017.

The good news for consumers is that car manufacturers and dealers are fighting back with lower prices, cheap credit and aggressive incentives.

The relief is welcome. The rising price of vehicles in recent years has caused a record amount of car loan debt and pushed prices out of the reach of many buyers.

Mohamed Gamel owns Motor City Sales, a small used-car dealership and body shop at 1231 S. Broadway.

He runs a cash lot, meaning he doesn’t finance the sales, unlike many of his competitors. That generally caps how much he can charge.

A few years ago he said he bought cars wholesale, fixed them up and retailed them for $4,000 to $6,000.

“Now, I sell them for $8,000, $9,000 for the same thing,” he said.

As prices come down, he said, his margins will get squeezed.

Switching to SUVs, trucks

The LMC Automotive consulting firm said incentives in March hit a record, averaging $3,768 per vehicle, the highest amount since March 2009.

In addition, cars and trucks are sitting on dealer lots for an average of 70 days, the highest level for any month since July 2009 during the sharp economic downturn.

The basic reason for the decline in demand is that car manufacturers have satisfied some of consumers’ pent-up demand. But the sales drop is also mixed with another trend: consumers switching from traditional cars to SUVs and trucks.

While car sales in March were down 10 percent, truck and SUV sales were up 5 percent.

“It’s been a trend for two years; a lot of people are going to mid- and small-sized SUVs,” said Scott Hatchett, owner of Hatchett Buick GMC and Hatchett Hyundai. “They get the same gas mileage, and you get more with it.”

Companies with a large portfolio of SUVs and trucks are encouraged. Those without are looking for answers, Hatchett said.

Ford, in particular, got hammered nationally in March. Its car sales dropped 24 percent from the same month of 2016, while sales of its trucks were up. Fiat Chrysler and Toyota also saw sales declines. Others saw gains, but less than expected.

And it’s not just that some vehicles are less popular. There’s a strong geographic component, as well.

Les Eck, owner of Rusty Eck Ford, said the Midwest is seeing less of a sales slowdown than the coasts. That’s partly because the economy in Wichita, and much of the Midwest, has recovered more slowly and won’t fall as fast.

Wichita traditionally lags a U.S. recovery by two years. In this cycle, however, because of aircraft manufacturing consolidation, the Wichita metro economy lagged five years behind the U.S. recovery.

“The rest of the country dropped dramatically, but the Midwest never dropped, or dropped just a little,” Eck said. “The Midwest doesn’t get the highs and lows the rest of the country does.”

Used cars

Used car dealers are in for a particularly difficult time, say some in the industry. Prices are starting to fall nationwide and will soon put the squeeze on dealers.

CarMax, the nation’s largest seller of used cars, said the retail price of its vehicles was down 1.6 percent compared with the same quarter in 2016.

Don Pierce, chief financial officer of Air Capital Finance, which owns Carbanc Auto Sales on South Broadway, said the added pressure comes from the expiration of the huge number of car leases signed over the last three to five years.

All of those cars are being sold into the used car market and will serve to drive down prices for dealers.

“It will be a tough car year across the board,” Pierce said. “We had a heck of a run.

“The future will be OK, but it will take a few years to get there.”

However, 2017 might be a decent year for some dealers because the Wichita economy may perform pretty well.

“I’m kind of encouraged about 2017,” said Sean Tarbell, general sales manager of Davis-Moore Auto Group. “I see the rest of the year being quite solid.

“Nationally it wasn’t a great quarter, but it was in our market. We tend to lag, so I wouldn’t be surprised if we had a record year.”

This story was originally published April 12, 2017 at 7:00 PM with the headline "Can consumers expect better deals on cars and trucks this year?."