News Column

Need to Replace Cars After Sandy Boosts National Sales

Dec. 4, 2012

Brian Ianieri, The Press of Atlantic City, Pleasantville, N.J.

automobiles

Motorists buying new vehicles to replace ones damaged by Hurricane Sandy helped boost auto sales regionally and nationally in November.

Major automakers announced sales figures Monday, with most reporting increases from last year.

Chapman Ford Lincoln Mazda in Egg Harbor Township sold more than 200 vehicles last month, the most for the month in its 20-year history, owner/operator Bill Kassner said.

"Sales have been up pretty much for most of the year, and the sales in November put us over the top," he said.

Kassner said about 37 percent of November sales were attributable to people having to replace vehicles from the hurricane.

At Avalon Honda in Middle Township, Vice President Richard Kull said sales had been strong throughout the year.

"Our sales were so good during the summer market we were able to get an additional allocation, which gave us a lot of cars," said Kull, who added that extra supply came in handy when people were replacing flood-damaged vehicles last month.

"Right now there are a lot of reasons to buy cars -- they're priced very reasonably and there are a lot of incentives. Unfortunately, some were forced to do it a little sooner than anticipated," he said.

Americans were already willing to buy a new car or truck last month because they're more confident in the economy. Also, the average age of a vehicle on U.S. roads is approaching a record 11 years, so many people are looking to replace older cars.

Sandy just boosted that demand.

The storm added 20,000 to 30,000 sales industrywide in November, mostly from people who planned to buy cars during the October storm but had to delay their purchases, Ford estimated. People who need to replace storm-damaged vehicles are expected to drive sales for several more months. GM estimates that 50,000 to 100,000 vehicles will eventually need to be replaced.

November sales, when calculated on an annual basis, are likely to be 15 million or more, the highest rate since March 2008, according to LMC Automotive, a Detroit-area consulting firm.

That's higher than the 14.3 million annual rate so far this year, even though November is normally a lackluster month due to cold weather and holiday anticipation. Both GM and Chrysler predicted November sales would run at an annual rate of 15.3 million.

If sales end up at 15 million for the year, it would be a vast improvement over the 10.4 million during the recession in 2009. Sales would still fall short of the recent peak of around 17 million in 2005.

But the ongoing "fiscal cliff" negotiations between Congress and the White House could still derail the industry's recovery. The term refers to sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.

"Exactly how much growth we can expect next year will depend in part on how Congress and the president resolve the fiscal cliff issue," said Kurt McNeil, GM's U.S. sales chief. "Markets and consumers hate uncertainty."

In New Jersey, new vehicle sales bottomed out in 2009, when about 340,000 were sold, according to data from the New Jersey Coalition of Automotive Retailers, a trade group of dealerships. This was a 31 percent drop from 2007.

Annual sales have not reached pre-recession figures -- which topped 500,000 -- but have increased since 2009, hitting about 400,000 in 2010 and about 430,000 last year.

The Associated Press contributed to this report.


For more coverage on the automotive industry, please see HispanicBusiness' Auto Channel



Source: (c)2012 The Press of Atlantic City (Pleasantville, N.J.) Distributed by MCT Information Services


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