News Column

Hispanic Car Dealers Look Toward Active Buyers' Market

June 13, 2011

Holly Ocasio Rizzo--Contributing Writer

Hispanic dealers for domestic automobile brands in many markets are riding the momentum of 2010. Dealers say they're making sales because manufacturers offer more attractive and more technologically advanced products, and the credit crunch that made it difficult for buyers to get car loans has eased.

At the same time, several factors are contributing to changes in buyers' habits: Fluctuating oil prices make fuel-efficient vehicles more attractive, the lingering effects of the Japan earthquake and tsunami are bringing consumers back to domestic brands and the declining availability of used vehicles is a boon for new car sales.

But after the blows of 2009 nobody is quite yet ready to celebrate. "We were humbled. Those of us who managed not to board up our windows are operating leaner and meaner," said Marion Luna Brem, owner of Love Chrysler Dodge Jeep in Alice and Corpus Christi, Texas.

Figures tell part of the story. TrueCar.com, a California-based source of industry trend information, found that Hispanic car buyers preferred Toyota, at 19.5 percent, followed by Honda at 13.7 percent and Nissan at 11.9 percent. The top domestic brands were Chevrolet at 9.4 percent and Ford right behind at 9.3 percent. The top five vehicles purchased were Toyota Corolla, Honda Civic, Honda Accord, Toyota Camry and Ford F Series; and the brands with the highest growth among Hispanic buyers from 2009 to 2010 were Buick, Hyundai, Cadillac, Kia and GMC.

However, Toyota sales eroded in some product areas with the earthquake and tsunami. The company posted an 11 percent increase in vehicle sales during the first quarter but decreases in March of 1.2 percent for Toyota passenger cars and 20.4 percent for light trucks. Sales for fuel-efficient models were up: a 57.8 percent increase from March 2010 for Scion and a 42.5 percent increase for TMS hybrids.

The post-tsunami panic that initially struck U.S. automakers has for the most part subsided. Rather than turn to other parts suppliers, thus risking quality control, they moved the parts they had to where they were most needed.

In San Antonio, Clarence Kahlig, president of North Park Toyota and North Park Lexus, said that despite the quake his Toyota sales were up 20 percent so far in 2011 over last year. The hot models are Camry, Corolla, Tundra, RAV4 and Prius -- but the Lexus RX and ES 300 are even hotter. "Our Lexus sales are ahead of the national average," Mr. Kahlig said. "We average about 200 units a month."

Toyota of North America has said it will ramp up production to 70 percent of normal levels in June, compared with 30 percent in May. Some models -- including Camry and Corolla -- are scheduled to return to full production in June. The Prius v, unveiled at the Detroit Auto Show, will be delivered to U.S. dealers in the fall.

On the domestic side, "In 2011, we're healthy, the inventory looks good and we're on top of the hill again," said David Ferraez, owner and president of Green Brook Buick GM in Green Brook, N.J. "I'm very positive about the next six months, next year and the next two years."

It's a big change from the downturn. "Now all of a sudden I'm one of the top dealers in the Northeast with Buick," he said.

About 65 percent of other buyers are giving up foreign cars, compared with 10 percent before the downturn. The difference, Mr. Ferraez said, is a better product. The Buick LaCrosse and Regal, he said, "are pretty much jumping out of showrooms." On the GMC side, the Acadia crossover "is hot as a firecracker."

"In general, every month in 2010 was better than in '09, and every month in 2011 is better than 2010 in every line I have," said Mike Shaw, who owns Chevrolet/ Saab and Buick/GMC dealerships in Colorado, and Kia, Toyota and Honda dealerships in Texas. "With General Motors, it's definitely going to continue because of lower inventory in the Japanese lines, and GM will pick up market share." He expects Japanese vehicle inventories to be 40 percent to 50 percent lower than before the tsunami.

Particularly good movers at his GM dealerships are the Chevy Equinox and the Cruze, fueled by higher gasoline prices. "We're seeing buyers keep their larger vehicles and buy a smaller, more fuel-efficient car as a commuter car."

Ford, too, is seeing an impressive upswing, with a year-over-year increase of 36.5 percent in sales to Hispanic buyers and a general market increase of 36.6 percent, according to David Rodriguez, Ford's multicultural marketing communications manager.

Vehicles are moving fast at Gus Machado Ford, with outlets in Hialeah and Kendall, Fla. "One store is up almost 80 percent, and Hialeah is up 20 percent," said general manager Victor Benitez. "Fuel-efficient vehicles are doing better because the price of gasoline is high," Mr. Benitez noted. Yet, he remains cautious. "I think people are realizing this gas situation is temporary. They know what happened in 2008." That summer, gasoline prices spiked to more than $4 a gallon but tumbled by Thanksgiving.

A continuing challenge: customer credit. "One of the reasons we're doing better is we're able to offer loans to buyers," Mr. Benitez said.

Texas dealers also are noting the credit turnaround.

"We have more lenders available to us now than we need, which is new," said Alfred Flores, dealer at Spring Chrysler Jeep Dodge in Houston and chairman of Chrysler's National Dealer Council.

A bigger factor in his dealership's gains this year is new, improved vehicles. "We're up 30 percent year-over-year from last year," Mr. Flores said. "Our six-month goal for the second half is a 40 to 50 percent increase in sales over 2010."

He said the new Jeep Grand Cherokee is attracting BMW, Lexus and Mercedes drivers, and he expects to sell 50 Fiat Cinquecentos in June, the first month his dealership will have them. Other sellers are the new Dodge Charger and the Chrysler 200 and 300.

"With Chrysler out of bankruptcy, it has been a pinnacle year for us with the company's 16 new models," Mr. Flores said.

"Chrysler Group's all-new or significantly refreshed 2011 models continue to drive monthly sales gains," Chrysler said in a release about May new vehicle sales, up 10 percent from May last year. "The new 2011 Chrysler 200 mid-size sedan, the all-new 2011 Dodge Durango SUV, the all-new 2011 Jeep Grand Cherokee and new Jeep Compass, and the new 2012 Fiat 500 all significantly contributed."

While Dodge posted a 5 percent decrease in sales in May from a year ago, its newly returned Durango SUV saw sales of 4,358 vehicles, according to Automobile Magazine. No Durangos were produced in 2009 or 2010.

"Chrysler Group just posted its 14th consecutive month of year-over-year sales gains," said Fred Diaz, president and CEO of Ram Truck Brand.

Ram trucks posted a 13 percent sales increase in May from a year ago.

Although Chrysler dealer Marion Luna Brem has seen monthly gains since December 2009, she attributes them to a combination of factors. "We like to pat ourselves on the back, but a lot of it was pent-up demand," she said.

Memories of the dark days of 2009 remain, however. Ms. Luna Brem came out of semi-retirement to work 60-hour weeks and poured her own retirement funds into the business. She also turned her attention to service and to pre-owned vehicles and laid off more than half her employees in a 30-day period.

Her outlook for the rest of 2011: "Optimism," she said.

An emerging factor in new-car sales is a shortage of used cars, which is driving up the price. It's a left over of the downturn. Mr. Kahlig explains: "When the domestic manufacturers were in trouble in 2008 and 2009, they were not able to lease vehicles, because it was too risky. So there are not as many lease returns on the market today. When we go to auctions where we would normally see 400 cars in the past, now we see 160."

In Los Angeles, Adrian Fargeat Jr., general manager of Super Ford in Industry, Calif., a Los Angeles suburb, said: "We used to see the end of the tunnel from far, far away, but now it's getting bigger as we get closer."



Source: HispanicBusiness.com (c) 2011. All rights reserved.


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