In early March the Wall Street Journal reported that vehicle sales were up noticeably in February from a year earlier. Ford had increased its sales by 9%; Toyota by 4%; and General Motors by 7%. Sales in 2013 are now projected to top 15 million cars and trucks, a significant rise.
Car and truck dealers in the Rio Grande Valley saw the same surge. Reports circulated of dealerships selling 60 to 100 cars in a single day in late February.
Ronnie Bernal, general manager, partner and vice president at Frank Smith Toyota and Frank Smith Hyundai, said Toyota has high expectations of its dealers this year. “Their forecast and production numbers are through the roof. They don’t do that without knowing something. The car business is going to go through some growth it hasn’t had in some time. The question is, are the dealers ready for it. Toyota said even if you don’t do anything different, you are going to have a good time.”
But Bernal still remembers the dark days of 2008, which coincided with the dealership’s relocation to the Expressway frontage in Pharr. “Every car dealer’s prayer then was ‘Dear Lord, let me last through this recession and I promise to do things different next time.’” So he is poised to do things differently. “To go to a Category One (dealership level), you need to do something new. Our dealership has a phenomenal team. We are going to ramp up and go for our fair share.”
The recent surge in sales can be attributed in part to pent-up demand, Bernal said. After the Cash for Clunkers program, people kept hanging onto their cars, which are now engineered to last much longer. But the average American car or truck is now about 11 years old. Bernal has seen vehicles with 150,000 to 175,000 miles being offered for trade-in. But a notable portion of customers are buying new cars without a trade-in.
“The manufacturers have confidence people are ready to buy cars,” Bernal added. As a result, more vehicles are available, and manufacturers are putting more money in advertising and incentives.
Ford sales
Ford introduced an all new Fusion and redesign of several vehicles last year. “It’s taken about this long to get to capacity (in production) and to get the dealers the inventory they were looking for by January and February,” said Jim Tipton of Tipton Ford in Brownsville.
Other factors have come into play to send people to dealerships in large numbers. “A lot of folks get their income tax refunds in the first quarter. We generally have people with good down payments in the first quarter and that happened as anticipated,” Tipton said. Plus, the American fleet of private cars and trucks is now as old as it’s been in the last 60 years. Interest rates are so low and that makes financing highly attractive. National, regional and local advertising were all going full blast. In addition, Ford rolled out truck promotions during January and February offering their best rebates and incentives. In the Valley, Ford trucks and SUVs outsell cars 2:1.
To read more of this story by Eileen Mattei, pick up a copy of the April edition of Valley Business Report, on news stands now, or visit the “Current & Past Issues” tab on this Web site.