News Column

Car Dealers Make the Pitch for Buying Local

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Car dealership general manager Patrick Beck prefers the soft sell when someone he meets is considering going out of town to buy a vehicle. But in his back pocket he keeps this:

"Look at your kids and say, 'Son, daughter, I believe so much in your education that I'm going to support the teachers outside the county, even though you go to school here.'"

Below the belt? Maybe. But some say it's time to drive home the point that buying cars and trucks within the community has big implications for local government services, businesses and jobs.

Not only is more money riding on where people buy their vehicles as sales begin to rebound, but also, competitors in Los Angeles County recently demonstrated they have no qualms about trying new tactics to lure car shoppers out of Kern County.

City officials met last summer with Bakersfield car dealers in an attempt to work out new sales incentives to counter a threat from the Antelope Valley. Although results of the talks were more modest than some had hoped, dealers are working to maximize local purchases with initiatives such as the spring sales drive they are hosting in conjunction with area credit unions.

There is every reason to keep an eye on the issue. Cities depend heavily on vehicle sales tax revenues, and car dealers are anxious to build on the gradual recovery being felt in showrooms across the country.

Beyond that, the Internet is blurring the borders between local dealers and car lots outside the area.

For instance, the California New Car Dealers Association's director of legal and regulatory affairs, Jonathan Morrison, noted that typing "Bakersfield" next to a vehicle manufacturer on an Internet search engine doesn't guarantee the names that come up will be located in Kern County.

That's not a problem for some people.

"If you're a Bakersfield customer and you're looking to buy a Ford," he said, "you're not just going to look in Bakersfield."

The numbers

Most Kern residents buy their vehicles inside the county. Close to three-quarters of all new car and truck transactions in March were between local dealers and local buyers, up from about two-thirds six years earlier, according to Cross-Sell Reports data compiled by The Californian's market research department.

At the same time, a little more than a fifth of all new vehicles purchased by county residents in March -- 514 cars and trucks -- were bought outside Kern. The largest share of these outside sales (25 percent) took place in the Antelope Valley; the next biggest source of such purchases was Santa Clarita (11 percent).

Local car dealers are not above selling outside the area, but it's happening less often. In March, Kern dealers sold 136 vehicles to non-county residents, amounting to 6 percent of all local sales in March. Six years before, these transactions accounted for 11 percent of Kern vehicle sales.

Meanwhile, new vehicle sales taxes remain a primary driver of Bakersfield's municipal revenues, even as fluctuating car and truck sales in recent years have made them a bumpy source of money for the city's general fund.

Of the county's 7.25 percent sales tax, three-quarters of 1 percent goes to the city where the product -- be it a car, a gumball or a washing machine -- was sold.

Bakersfield sales tax revenues from new vehicle purchases in Bakersfield totaled $6.8 million in 2011, up from $4.7 million in 2009 and $6.3 million in 2008, city records show. For each of those years, sales tax revenues from vehicle purchases accounted for less money than city revenue associated with department store and general store sales -- but more money than was contributed by taxes from service stations, heavy machinery or oil and gas services and equipment sales.

Ambitious in Lancaster

Recent efforts to boost in-county vehicle sales can be traced to an aggressive set of marketing campaigns launched three years ago in Lancaster.

Hoping to reinvigorate its own economy, the city put together a local stimulus program that included a sales rebate on vehicle purchases. The rebate, funded in part by the city's redevelopment agency and marketed within and beyond city borders, offered buyers a gift card good toward purchases in Lancaster, in an amount equal to the car or truck's registration fee. The incentive lasted for only a few months in early 2009.

Sales attributed to that particular program amounted to $27 million, including goods purchased with the gift cards, said Luis Garibay, the city's senior project coordinator.

Two years later, in early 2011, the city partnered with the Lancaster Auto Mall Association to begin an advertising campaign that highlighted refund offers applicable to the purchase of new and used cars in the city. A city spokesman said the television, radio, print and billboard campaign was targeted specifically to Tehachapi, Mojave and Bakersfield.

Garibay said he was unaware how much money the city has spent on the advertising campaign, which he said is ongoing and is funded largely by city car dealers.

Reaching outside one's own market is generally considered a breach of etiquette, said John Pitre, general manager of Bakersfield's Motor City Auto Center and former president of the Greater Bakersfield New Car Dealers Association. Moreover, he said some vehicle manufacturers forbid their dealers from doing it.

Don Fleming, owner of Valencia Acura and president of the Santa Clarity Valley Automobile Dealers Association, said members of his group have every right to advertise in Kern County, though he was unaware whether any do so. Fleming said he personally chooses not to.

"It seems to me we ought to take care of our own backyard before we go anywhere," he said.

But Morrison, at the statewide association, said advertising across county borders might be expected in tough economic times.

"I think you'll see that, as local governments are starved for revenue, you'll see that more and more," he said.

Bakersfield responds

Last year Pitre and other Bakersfield car dealers approached City Hall with proposals to promote local vehicle purchases.

One idea was to adjust the city's local preference program. The dealers asked City Manager Alan Tandy to increase the 1 percent benefit Bakersfield businesses receive when they submit a bid to supply city government.

City Councilman Russell Johnson helped champion this effort, which earlier this year resulted in the City Council raising the local business benefit to 3 percent.

"It sends a message that, hey, the city of Bakersfield is committed to local businesses," he said.

A separate proposal pushed by local car dealers was a bit stickier. They wanted the city to emulate Lancaster's gift card program.

Bakersfield officials studied the Antelope Valley incentive and concluded that it could not be copied here, mainly because of limitations within Bakersfield's now-defunct redevelopment program.

In turn, the delegates from Bakersfield's auto mall asked whether the city might be able to help with some advertising or otherwise chip in for sales incentives.

To Pitre, the proposal looked mutually beneficial: The more money the city invested in promoting local dealerships, the more its own sales tax revenues would increase.

But Tandy, the city manager, said there just isn't enough money to support that kind of thing. What's more, he said the city has no expertise in advertising.

"We don't do retail," Tandy said.

Local dealerships are staying on message nonetheless, making the point at every opportunity that buying local means supporting your own community.

Pitre said that means jobs as well as city services. He noted that Bakersfield car dealerships employed 3,800 people at the end of last year, including sales people, parts staff and mechanics. That's up 9 percent from 2010, he said.

Beck, the general manager at Bakersfield Hyundai who now serves as president of the local new car dealers association, pointed out the added benefit that buying a new vehicle in town means it can be warranty-serviced locally as well.

That's not even counting the good-neighbor discount.

"The best deals we reserve for people that are local," he said.

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