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Sunday, March 27, 2011

Auto sales shift back into top gear

Bob Romeiser, sales manager at Doyle Chevrolet Subaru in Webster, says GM’s renewed vigor in leasing is an important aspect of its rebound. / CARLOS ORTIZ staff photographer

Auto sales shift back into top gear

Recent sales at local car and truck dealers reveal that buyers are speeding away from the recessionary gloom faster than a race car on a straightaway.

New vehicle sales, including a revved-up leasing business at the once-dormant General Motors, were up 48 percent in January and February compared with the same period of 2010, with February even stronger than January. Used car sales rose 12 percent year over year.
The local numbers reflect similar growth on the national level. GM’s domestic sales jumped 49 percent in February. Gains at Ford and Chrysler, while more modest, were nevertheless strong with increases of nearly 14 percent and 13 percent, respectively, from a year earlier.

Rising food and gasoline prices in March may cause a bit of a slowdown, but the historic revival of domestic manufacturers, Toyota’s well-engineered recovery from recall problems and an uptick in the general economy have given a real lift to the local automobile market.
“Things are coming together,” said Brad McAreavy, president of the Rochester Automobile Dealers’ Association. “The banks are lending again, the economy is better and all the companies, domestic and imports, have quality products. Plus there’s a pent-up consumer demand out there.

“Still, dealers are cautiously optimistic. We’re on pace to sell about 38,000 units, new and used, this year, which is better than last year but still under what we did in 2007, for example.”
The return of General Motors to the top sales spot in the Rochester area is a key ingredient of the resurgence in early 2011. 
GM for many years was the leader in the local market, in part because of a local manufacturing presence, including a fuel-cell facility in Honeoye Falls.

That dominance was lost in the last couple of years as GM and Chrysler went bankrupt and needed bailouts from the federal government to survive.
But that was then. Now, local buyers are back in GM’s camp.
“For the first two months of 2011, Chevrolet is in the first place and by a wide margin,” McAreavy said. “It sold 1,300 units, more than twice the 600 units that Toyota sold.”

Local GM dealers cite the popularity of the Cruze, Malibu and the Volt, the latter being GM’s entry in the nascent electric-car market. Low interest rates anddealer incentives are sweetening the pot for many buyers.
But what may be moving GM so far ahead of its local competitors is the reawakened lease operation, back from the state of suspension imposed during the bankruptcy and bailout period.

“GM is more confident again and that is showing up in the return of the lease,” said Dave Maroulis, sales manager at Bob Johnson Chevrolet in Greece. “In a normal year, we do 70 percent new, 30 percent used. This year, we’re doing 80 percent new and 80 percent of those are lease deals.”
Maroulis said customers have more lease financing options now than before the GM meltdown. There is the traditional GMAC financing arm, now called Ally Financial, and GM Financial, which is the name GM gave AmeriCredit when it was acquired for $3.5 billion last year. U.S. Bank is a third option.

“What customers are finding is that they can get a three-year lease deal for what they would have spent on a $6,000 or $7,000 used car,” Maroulis said. “And they get a new car in three years.”
It’s significant, said Bob Romeiser, sales manager at Doyle Chevrolet Subaru in Webster, that GM has re-entered the leasing side of the business with such vigor, as it was leasing that helped deflate the company.

The company’s leased cars had lost so much value when they were returned for resale at the end of the lease period that GM was stuck with huge losses and cars it couldn’t unload. But new management turned things around.
“The old boy’s club is no more,” Romeiser said. “The new team came in and just went to work.”

The domestic comeback overshadows continued solid performance by foreign manufacturers. Toyota weathered a severe recall storm last year and did a good job, McAreavy said, in standing up to the problems, repairing them quickly and communicating well with dealers. Through February, Toyota, the local market leader last year, is in second place with 600 units sold. Honda and Nissan hold third and fourth places.

Down the list but coming on strong — at least according to ubiquitous TV pitchman Billy Fuccillo — are the Korean imports, Hyundai and Kia. Fuccillo owns dealerships for both brands in Greece as part of a string of 21 dealerships in upstate New York, Florida, South Carolina and New Mexico, where he appears in ads as Billy Fernandez.
“They love me as Billy Fernandez,” he said from his Coral Springs, Fla., store. Fuccillo, who said he spends about $2 million a year on TV, radio and print advertising in the Rochester area, ramps it up when the economy heads down.

“I don’t need to advertise when things are good,” he said. “When everybody else is backing off, I do more.” 
Fuccillo said he tapes his TV and radio spots in one marathon day every month. He said the ads aren’t scripted and that his tag line “It’s huge,” just popped into his head during one taping session.
“I said it and everybody started saying it,” he said, refraining from uttering it over the phone.

If tough times bring a surge of Fuccillo TV ads, then it might be time for a counter-strategy because the Rochester market, while not yet huge, is growing again.

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