VOL. 37 | NO. 8 | Friday, February 22, 2013
Economy, hybrids drive increase in new-car sales
By Joe Morris
The period between 2008 and 2010 wasn’t the best time to be selling cars, new or used, in Middle Tennessee. But for those dealers who adjusted their inventories, worked with customers and just held on, good times appear to have arrived again.
No one is saying that there’s a car-sales boom in Middle Tennessee.
The economy is far from robust, which is still making some people hesitant about such a major purchase. Still, things are much better than they were even a year or so ago, and that’s enough of a positive for people whose sales success is driven by optimism.
“Our low point was 2009, and 2010 was not a great year, but it has been coming back since then,” says Steve Brink, general manager at Crest Honda in Nashville. “We’ve been a little bit insulated in Middle Tennessee, as far as the economy goes, so that worked in our favor as well.”
The Honda Accord continues to be the dealership’s best seller, and with a new model, as the Civic and CRV, there’s plenty of interest from buyers. Crest also is moving more hybrids, and with three different models on the showroom floor there is plenty to pick from, Brink says.
“The challenge is just getting them here,” he says. “They are still made in Japan, and they are still recovering from the tsunami and aren’t producing them as quickly as we’d like.”
Credit pressure eases
Crest sold 241 cars in January, up from 199 during the same month last year. Used car sales have been steady, as well. For the year, the dealership sold 2,047 vehicles, a record for the market, which Brink attributes to both a recovering economy and also some easing by lenders.
“When I began running this store I was surprised at how many people were approved for credit,” he says. “Honda is not the sexiest car on the planet; we’re more known for being safe and holding our value.
“But that means that customers who come in here have pretty good credit,” he adds. “Even with that, though, lenders have opened up considerably from where they were two years ago, and we are seeing an A-tier credit customer between 80 percent and 90 percent of the time.”
Prius hot in Gallatin
The picture is equally bright at Ron Hibbard Toyota in Gallatin, where the Toyota brand has come back from the negative press it received a few years ago during a large recall over acceleration issues in some models.
January’s sales were one car more than 2011, and the trend has been steady and climbing, GM Ron Hibbard says.
“Our hybrid technology is a leader for us; the Prius family is even outselling the Camry in some markets,” Hibbard says. “And we have so many cars now that are also a hybrid, so we can offer that for most of our models.”
The dealership is moving new and used cars at a one-to-one ratio, in large part due to more leased vehicles coming onto the market, Hibbard says.
“About three years ago, when the big bank crunch hit, everybody got out of leasing except Toyota,” he says. “And there’s not a car lot in the United States that can’t sell a used Corolla or Camry.
“We do OK because we’ve got such a good brand, and we work to be more of a relationship store, which helps in terms of building customer loyalty and generating referrals. It makes things easier for us all the way around.”
Hibbard uses Toyota’s financial services arm for most of his lending needs, and it remained very aggressive during the slow economy, he says. The only difference was a slight turndown in the amount being financed, which is still holding true today.
“There was a time when you could get whatever amount you wanted if you had good credit, and now they’re a little tighter,” he says. “There’s more of a requirement in terms of a down payment than there used to be, but it’s nothing crazy.”
Even Ford has hybrids
At Ford of Murfreesboro, formerly Alexander Ford, new-car sales shot up 45 percent and used 30 percent last year. That’s a drastic increase, and one that was fueled by a variety of factors, says David Lee, owner and general manager.
“We began getting better in 2011 and, after we went through the buyout, things really rose,” Lee says. “We had 160 new and used cars sold this January, which is a very good number for us.”
Ford’s entry into the hybrid market has allowed him to bring in customers who were looking at other brands before, he says, adding retooled engines that provide both fuel economy and power also get prospective buyer’s attention.
“Hybrids are new territory for us because, historically, Ford has been all about trucks,” he says. “We got six hybrids in last month and sold every single one.”
Lee says his dealership is “still selling about 50 F150s (trucks) a month” with customers willing to pay “an extra $1,000” for redesigned 6-cylinder trucks instead of eight-cylinders.
“It is all about the fuel economy, even with trucks, and we’re having a lot of success there,” he says.
Banks step up
Lee says he also is seeing more people thanks to more financing and leasing options.
“The people who were bad credit risks before are still bad, but we had a lot of people with good credit who took a hit to their score for various reasons,” he says. “Now they are doing better and the banks have stepped up tremendously.
“We have banks offering 1.9 percent for 72 months just to earn the business; that’s astounding, because they are making no money. The interest rates are going down, and leasing is making a strong comeback, as well.
“But really,” he adds, “it’s the quality of the cars. What’s out there now is greatly improved over the models from just a couple of years ago, and everything continues to improve as far as technology and fuel economy. People are responding to that, and now that they are willing to spend some money, and can get financing, we’re able to sell more vehicles.”