News Column

Dealers Bullish on 2012

Nov. 15, 2011

Ralph Gray, Contributing Writer

Key Hispanic auto dealers are buoyant about their local Hispanic markets for model year 2012. However, none of them is wearing rose-colored glasses.

They agree that much depends on the state of the economy in general. Yet, the dealers are hopeful. Their customers are sticking to their basic buying motives—no super-trendy stuff here.

Listen to Mike Shaw, whose Mike Shaw Automotive Group in Denver is the third-largest minority-owned dealership in the nation:

"We are excited and optimistic for 2012. General Motors has responded to consumer demands to produce more fuel efficient and reliable vehicles." Still, it isn't business as usual, the Chevrolet, Buick and GMC dealer says.

"There is no doubt that the recent weakened economy has had an impact among auto consumers." However, "Hispanic consumers remain optimistic about their future finances and continue to go out and make auto purchases and accessorize their vehicles," Mr. Shaw explains.

Pent-up Demand
It's still the economy, points out M. Allan Vigil, whose Allan Vigil Ford-Lincoln dealership is in Morrow, Ga., with a second Ford store in Fayetteville, Ga.

"A lot depends on the economy. There's a lot of pent-up Demand -- people waiting to see what the economy does," Mr. Vigil says.

"I don't see a whole lot of confidence in the Hispanic or any market. There's a lot of wait-and-see. All this bickering in Washington, D.C., doesn't do any good for anybody," he adds.

Still, his stores are "selling everything we can get" when it comes to fuel-efficient cars like the Fiesta, Focus and Fusion. "People are realizing Ford is a leading contender in fuel economy," the dealer says.

A particular problem is gasoline prices. "When gas spikes close to $4 a gallon, it really gets to be an issue," Mr. Vigil says. Gas at $4 a gallon? Not a problem here, says Mark Alaniz, sales manager for Love Chrysler Dodge Jeep in Alice, Texas, deep in the heart of oil country.

"When gas prices go up our business goes up because more people are at work. We never complain about gas prices down here," Mr. Alaniz says.

For Love Chrysler, the Hispanic market is most of the market. "About 85 percent of our business consists of Hispanic people," the sales executive says.

New Products Help
With most of Love Chrysler's revenue coming from new vehicle sales, the outlook for the 2012 model year is upbeat. "For most of our refreshed lineup, it will be a banner year. Sales are way up and it has a lot to do with new product," Mr. Alaniz says.

The new Dodge Durango sports utility, Chrysler 200 sedan and Ram pickup, both gas and diesel, lead the hit parade.

Hybrids? "Not so much," he says.

But when gas prices skyrocket in South Florida, sales of hybrids jump as well, reports Jeronimo Esteve, whose Headquarter Toyota is in Miami. "Prius is doing very well."

He believes Toyota vehicle sales "are going to come back with a bang." Although Toyota was impacted by the earthquake in Japan, both his Hispanic market and general customers haven't deviated from past buying habits.

"I haven't seen any change. They both are looking for a lot of value in brands that give them value over the long haul," the dealer says.

"We are looking to hire more sales associates. And we have not laid off a single person," Mr. Esteve adds.

Work Vehicles Popular
Another economic indicator is sales of Tundra pickup trucks. "Tundra is moving very well. Still can't get enough of them," Mr. Esteve adds. Back when the supply was severely disrupted "we could have played football in our showroom," he says.

"People buy those trucks as work instruments," Mr. Esteve says.

That's echoed by David Ferraez, president of Green Brook Buick GMC Suzuki in Green Brook, N.J.

"Hispanic buyers are more inclined to buy a vehicle for its use more than price or style. They want a vehicle that is used as it is meant to be used. They want a truck that gets you there—not the most luxurious because they are more interested in productivity," he says.

Crossover sports utility vehicles are the top sellers, though. The GMC Acadia is the leader, followed by the smaller Terrain. The Sierra is the pickup truck of choice. The hybrid version has little demand. The Buick Regal leads passenger cars. The sport turbocharged model "does OK but it's not the largest volume," Mr. Ferraez says.

Prudent Buyers
Overall in 2012, he's looking for "significant increases in sales. The economy is getting better by the day. We're seeing more construction going on. It's going to get better rather than worse," the New Jersey dealer says.

The GMC Sierra has been especially strong in its heavy-duty configuration, says Mario Murgado of Miami (Fla.) Automotive Inc. The hybrid models help on fuel economy. The coming Buick Regal GS (for Grand Sport) is "a rocket and great performer."

"People are hunkered down a little from big purchases. They want to make prudent buys." So buyers go from the full-size GMC Yukon SUV to the mid-size Enclave and Terrain, Mr. Murgado says.

"I'm very optimistic about the auto industry for 2012," says Irma Elder, CEO of Elder Automotive Group of Troy, Mich. "Although I cannot predict how much growth there will be, I'm very confident that there will be growth in the next year."

She says her best-selling models are the Ford Escape, Fusion, Explorer and F-150.

Quality and Reliability
Denver dealer Shaw is equally upbeat. "We're optimistic." Part of that comes from statistics that show Denver Hispanics accounting for 6 percent of all new vehicle sales there. "Chevrolet is a leading domestic brand for Denver Hispanics," he says.

The compact Chevy Cruze is popular among younger Hispanics.

"We are excited to see how the Sonic subcompact performs," Mr. Shaw says. "What we have seen is that Cruze is popular among Hispanic professionals that are looking for fuel efficiency and comfort. The LTZ model is the model of choice."

Hispanics don't differ from the overall population when it comes to big issues like fuel economy, quality and vehicle price, Mr. Shaw notes.

"The difference is in the order of importance for Hispanics," he says.

"At the top of the list is quality and reliability. Then comes fuel economy with price the least important factor.

"For Hispanics, they choose to rely on the value equation when they purchase the vehicle. The price or payment does not matter if the vehicle does not perform or fi t their family needs."

The Internet is used heavily to formulate buying decisions. After that, social networks chime in.

"We have customers taking photos of their new vehicle and uploading them to their Facebook pages. They are proud of their purchase and want to share that," Mr. Shaw points out.

Source: (c) 2011. All rights reserved.

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