News Column

Auto Sales Are Nearing Pre-recession Levels

Sept. 18, 2012

Kyle Kennedy

Autos

U.S. auto sales had a big month in August, and projections call for 2012's sales to be the highest in five years as consumers make long-delayed purchases amid improving lending conditions.

"I would say 2012 will probably be our best year since the downturn," said Benny Robles Sr., president of Bartow Ford in Polk County, Fla. "Last year was a good year for us, and we've noticed this year has been even better."

New vehicle sales at Bartow Ford are up roughly 14 percent from the same time last year, Robles said, and used sales have climbed more than 25 percent. Fleet sales are seeing strong growth, and Robles said Bartow Ford's staff has bulked up to more than 230 employees after cutting down to approximately 180 a few years ago.

Still, "I'm not back to where I used to be before the crash, before the housing market collapsed and all that stuff," Robles said. "I'm probably 70 percent of where I used to be in 2006 and 2007."

Winter Haven Honda is another local dealership doing well in 2012.

"We should sell 1,650 cars this year, new and used, compared to 1,350 last year. And last year wasn't horrible," said Joe Wagner, general manager. "Overall, the economically-fueled vehicles are still holding strong, but we're seeing it across the board; some of our bigger vehicles are doing fine too."

U.S. auto sales were up 20 percent in August from the year before, with nearly 1.3 million units sold, according to Autodata. Last month was especially good for Honda and Toyota, and robust demand for full-size pickup trucks signaled more confidence among businesses.

Nationwide, auto sales are on track to exceed 14 million units this year for the industry's best performance since 2007.

The boost in activity comes at time when the average vehicle on U.S. roads is pushing a record 11 years old. After holding off for years, many consumers are finally springing for newer models.

Lakeland resident Barbara Whitman replaced an 18-year-old Toyota Paseo in March, opting for a new Corolla. The Paseo "was on its last leg ... the transmission was getting ready to go" said Whitman, 70. "I should have gotten rid of it a year before."

At Lakeland's Regal Automotive Group, "the average car we're trading in is around 10 years old, where it used to be six years, seven years," said owner Sal Campisi Jr. "Many of the cars we're taking to the auction have 180,000, 190,000 miles."

New and used sales at Regal are up about 20 percent this year across all franchises (Honda, Chevrolet, Kia, GMC), Campisi said.

Also helping car sales: better lending conditions. The credit reporting firm Experian said outstanding auto loans totaled $725 billion at the end of the second quarter, up about 6 percent annually and the highest level in three years.

"We are seeing the banks lighten up," Wagner said. "Two years ago, if someone had a foreclosure or was even currently late on a mortgage, the banks wouldn't touch them."

In addition, many auto dealers are doing well this year simply because there is less competition. Urban Science, a Detroit-based consulting firm, says there were 17,770 dealerships operating nationwide as of the end of June, down 15 percent from five years ago.

John Frith, vice president of Urban Science, said much of the decline can be attributed to small and underfinanced dealerships that were forced to shut their doors during the height of the recession, as well as General Motors and Chrysler downsizing their dealer networks.

There is reason for dealers to still be cautious. The forecasting company LMC Automotive recently lowered its 2013 sales projections slightly to 15 million vehicles, because of slower than expected economic growth in the second half of 2012.

"Dealers just need to not lose sight of their financial controls they put in place to get through the recession," Frith said. "The dealers who survived, they need to keep doing those things."

Information from the Associated Press was used in this story.



Source: (c)2012 The Ledger (Lakeland, Fla.) Distributed by MCT Information Services


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