Luxury Auto Sales Cruise Along: Area Dealers Dig Growth In High-Dollar Segment

Northwest Arkansas is brimming with millionaires. But Benton and Washington County are without a Lexus, Jaguar or Volvo dealership, and the wealthy in search of those wheels have to get them from Little Rock or Tulsa.r

The Fayetteville-Springdale-Rogers metropolitan statistical area is growing 3.5 times faster than the United States, and the median household income for the two-county area is projected to jump 23 percent to $52,778 by 2006 — $7,000 more per house than the projection for the state.r

The most upscale cars on-hand in Northwest Arkansas range from $62,000 for a 2004 Cadillac Escalade to $125,000 for a Hummer H1 model. Other high-end dealers who are licensed in the area include BMW, Toyota and Mercedes.r

General Motors Corp. manufactures about 1,000 Hummer H1’s each year for commercial use. About five of those $125,000 vehicles are sold annually in Northwest Arkansas — the same amount as Little Rock. So the simple answer may be the demand for cars with cachet is already being met.r

Michael Grieving, sales manager at Tim Hurd Lincoln Mercury in Fayetteville, said he is seeing more demand locally for a variety of upscale vehicles. Factors such as a 3.7 percent local job growth, according to the United States Labor Department, and a cost of living that’s nearly 10 percent below the U.S. average might also prompt car makers to think they could move more merchandise here.r

Grieving said he believes sales figures show people are buying luxury vehicles where they live. They may be comparison shopping other markets, he said, but many drivers are choosing to buy similar models that are available at home. r

“When you look at the two-county registration for luxury vehicles, you don’t see the luxury products that aren’t available here accounting for much of the market,” Grieving said. r

Tim Hurd said that his luxury business is growing.r

“We will sell more luxury cars this year than we did last year and primarily all we sell is luxury cars,” Hurd said.r

Grieving did say that upscale car buyers typically trade up over time. So there’s nearly always going to be a new crop of upscale car buyers down the road.r

“What you get is a staged buyer,” Grieving said. “The person bought car X before and now has upgraded to car Y. That is what the car business is all about. You start with the younger generation and on up to the World War II veterans.”r

Here’s a look at the highest-end vehicles that are available locally:r

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Hummerr

With a 6.5-liter turbo diesel engine the Hummer H1 gets about 11 miles to the gallon and has about 430 pounds of torque (strength). The military-style vehicle can only be sold in the United States, and Landers has Arkansas’ only two Hummer dealerships — in Fayetteville and Little Rock — among the 150 nationwide. r

Doug Simmons, Landers’ Hummer consultant and salesman in Fayetteville, said local Hummer sales are usually neck-and-neck with those at the company’s Little Rock dealership.r

Since its release into the market in July 2002, the Hummer H2 has sold well, considering that it stickers at half the price and has more of the comforts that are associated with a luxury vehicle.r

Right now, Landers Auto Park in Fayetteville has more luxury vehicles in stock than its Little Rock sister. Simmons said that is merely coincidence, but admits that there is a strong local market for luxury cars. So far in 2003, Simmons has sold three H1s and Landers in Little Rock has sold two. Simmons has a smaller territory in terms of population than Little Rock, but a larger territory geographically.r

“There is a bigger market for luxury cars here than other places — all you have to do is look up and down 540,” Simmons said.r

The Toyota Land Cruiser ($70,000) can also be found on the lot at Landers Auto Park, although Simmons said that only three to four are sold per month because Toyota doesn’t make as many Land Cruisers.r

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BMWr

BMW Volkswagen of Northwest Arkansas in Rogers has a close second to the Hummer. Its 2003 BMW 760 stickers for $120,000. It’s a four-door sedan equipped with a GPS navigation system, 16-way electric seats, front and rear climate controlled seats and air conditioning units and a V-12 engine.r

The car gets 15-23 miles per gallon. The dealership usually has 60-100 new and used BMW’s on the lot at any given time and sells an average of five BMW 760 models and five BMW M-5 Coupes per year. Sean Walter, a sales consultant for BMW Volkswagen, said he has seen a sales increase from month to month and overall for BMW vehicles.r

“Every month is a better month than the one before,” Walter said.r

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Mercedesr

Although you can buy a Mercedes for $32,000, the most expensive model found on the lot at Jones Motorcars Inc. in Fayetteville is the 2003 Mercedes S 430 at $75,000. The car gets about 22 miles per gallon of gas in town and 26 on the highway. The four-door sedan has a speed capacity of up to 150 mph and has a 4.3 liter V-8 engine with 308 horsepower.r

Mike Jones’ dealership sells between 15 and 20 S-Class vehicles per year and those range from $76,000-$130,000. The Mercedes S-600 comes in at $130,000 but is not currently available for sale at Jones Motorcars.r

Edward Stockburger, the Mercedes sales representative at Jones Motorcars, said the Mercedes is one of the safest cars. It has eight different air bags that deploy at different times during a crash.r

“I think people are buying more luxury cars because of our influx of Wal-Mart vendors and our good economy,” said Duane Matthews, General Motors sales manager at Jones Motorcars. “Twenty-five years ago, I would have said we are pricing ourselves out of the market, but our prices have increased.” r

He used the example of the 2003 model of a vehicle having the same price as a 2004, however the incentives on the 2004 model aren’t as great. “There is always something catching you,” Matthews said. “It is a great game.” Matthews said that dealers do not have a choice of how many vehicles they stock but rather the manufacturer dictates allocation. r

“You do the best you can with what you are able to get,” Matthews said.r

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Navigatorr

The most expensive luxury vehicle that Grieving had at Tim Hurd Lincoln Mercury was the Lincoln 4×4 Navigator of which he sells 70-75 per year. The $62,000 price of the Navigator has remained about the same for about five years.r

“The Navigator price has only gone up when new toys exist,” Grieving said.r

New toys have come on board in the last three years such as the $1500-plus DVD entertainment system, GPS-touch navigation screen, power running boards, power-lift gate, third-row folding seats, six-disc CD changer and climate-controlled seats that come with vehicle. Grieving said the same DVD player systems priced $1,500-$3,000 today would have ranged from $2,200-$5,000 three years ago.r

“The base entertainment unit then is the same price as the state of the art unit today,” Grieving said.

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High-end Wheelsrr

Here’s a look at the most upcale vehicles that are available in Northwest Arkansas:rr

Year—Make—Model—Stickerr
2003—Hummer —H1—$125,000r
2003—BMW—760—$120,000r
2003—Mercedes—S430—$75,000r
2003—Hummer—H2*—$75,000r
2004—Toyota—Land Cruiser—$70,000r
2004—Lincoln—Navigator—$62,800r
2004 —Cadillac—Escalade—$62,000r

r*Price based on a fully loaded model actually on the lot for sale. Hummer H2 priced from $50,000.rSource: the dealerships