More consumers seek new-car smell

by The City Wire staff ([email protected]) 160 views 

The average age of cars and trucks on the road today is 11 years old. Historically it's been about 8 years, but consumers have held on to their vehicles longer in the tepid economy and lackluster job market.

Economists say this has created a pent-up demand now driving auto sales to record numbers in recent months. Car dealers across the Northwest Arkansas and Fort Smith say 2012 is the best year they have had since pre-recession some four years ago.

Earlier this week Motor Intelligence released the September auto sales figures for the industry – light-vehicle deliveries climbed 13% to 1.19 million in September, according to Autodata Corp.

The annualized rate of 14.94 million – the best since March 2008 – topped the median 14.5 million pace projected by analysts, according to Phil LeBeau, auto analyst and CNBC blogger.

Toyota, Honda and Chrysler all posted double digit gains in September, making up for a few of the slackers.

Nathan Allen of Bentonville is enjoying that new-car smell himself, although he says he really didn’t plan to pull the trigger until early next year.

“I went looking, but I told the salesman there was no way I was going to buy the car that day,”  Allen said. “It was near the month's end and he said they had to sell 140 cars and had 120 sold.”

He was sale 121.

Allen, 27, is a loyal Honda owner and had a pretty nice ride in his 2008 Civic with 70,000 miles or so. And like many young consumers he was driving a car he bought used.

“I had paid down debt and really wanted to own a brand new car. They offered me a nice trade and 0.9% interest for 60 months so I took the deal and really love my new Crosstour,” Allen said. “In retrospect I’m glad I did it.”

Honda sales rose 30.9% in September with 117,211 deliveries. This year the Japanese automaker has sold more than 1.666 million cars and trucks, up 24% from a year ago.

Analysts say both Toyota and Honda are seeing really strong numbers as they are coming off a year when production was halted from the tsunami that left many U.S. dealer lots sparse for months on end.

Bobby Napier, sales manager at Everett Chevrolet in Springdale, said four years ago in the depth of the recession the dealership might record 40 sales a month. He said sales have improved each year since and the dealership is averaging more than 100 per month in 2012.

“Fuel efficient sedans and trucks are our biggest sellers this year. And Cameros are also a strong product for us. We can’t keep a Volt on the lot,” he said. “We have sold about 8 Volts this year.”

Cody Key, general sales manager for Smith Auto Group in Fort Smith, also reported a strong September for General Motors’ models.

“We have seen an influx of consumers wanting smaller, more fuel efficient cars in the past few months. The Chevy Cruise and Equinox are very popular models. The Equinox is a smaller SUV but it gets between 25 to 31 miles per gallon. Last month we sold two Volts,” Key said.

General Motors total sales were up 1.5% in September and 3.4% this year over last.

Smith Auto Group purchased Hendren Auto-Plex in Jane, Mo., earlier this year and says sales in the Northwest Arkansas, Southwest Missouri market are going well. At that location Smith sells Ford, Chevrolet and Chrysler Jeep. In Fort Smith, the dealer sells Chevrolet, Cadillac and Nissan.

Wayne Blunt, a sales manager at Lewis Ford, Chrysler Dodge Jeep in Fayetteville, said 2012 sales across the brands they offer has been steady.

Chrysler LLC, which includes Jeep and Dodge, posted an 11.5% gain in September deliveries. This year the automaker has seen a 23.9% jump over 2011.

Blunt said Dodge trucks remain popular in this region and enjoy a nice resale value to boot.

“Three years ago, I bought 20 Dodge Ram trucks from a Dallas dealer. They were 2009 models just about the time the 2010 trucks came out. We brought those trucks back here and sold them. I recently looked at the resale value of the same model and couldn’t believe it was nearly as much as we sold the trucks for new in 2009. That higher resale value is also allowing more people to trade for new these days,” Blunt said.

All of the dealers say used car prices continue to spiral upward as supply is limited and demand continues to grow. The Manheim Index that tracks used car prices has been declining the past few months after a steady increase from January 2009 through March of this year. Wholesale prices are still up 24% from their trough in the fourth quarter of 2008 and down 6% from the record high reached in May 2011, according to Manheim.

Blunt said Ford sales are steady this year thanks to brand loyalty and other brand owners trading in. Just last week I had a 2011 Toyota Forerunner trade into a Ford, a 2012 Cadillac Escalade also traded for a Ford and a 2011 Corvette owner drove away in Ford Mustang, he said.

Ford reported 174,860 cars and light truck sales in September, second only to General Motors. Sales were basically flat in the month down 0.2% from a year ago. Through August Ford sales are up 5.3% from the same last year.

All of the dealers surveyed said they are continuing to grow internet sales. Napier credits about 20% of Everett Chevrolet sales to the internet and would like see more.

Blunt said at Lewis’ five dealerships 70% of sales are linked in someway to the internet, whether the customer is researching before they come in or actually shopping online.

Key also said internet sales are important part of the business. He said the company would like to see more and is trying to market toward that segment.

Blunt said it’s not just cars that are getting smarter and totally equipped with the latest technology, the consumers are savvy and most have done their homework before they ever drive on a lot.

“The internet has really helped establish and regulate prices of automobiles. Consumers will shop online, research price, reviews and by the time they come in they know what their trade is worth. They also know that they can at what price they can by essentially the  same vehicle from several other lots,” Blunt said.

He and the other sales managers say the buying experience has changed from the days of haggling over price and terms.

“I for one, am glad to see the changes,” Blunt said.