Auto dealers hopeful

After one of worst years in history, dealers say ’10 will be better

Peter Marcus, DDN Staff Writer

Monday, December 28, 2009

Following one of its worst years in history, local auto dealers remain optimistic for the coming year.

The Colorado Automobile Dealers Association said last week that despite a continual decline in new-vehicle registrations, its members believe a desire for fuel-efficient vehicles will help to spur growth.

“The downturn in metro Denver’s auto and light truck registrations and sales continue to reflect our nation’s economic downturn,” said Tim Jackson, president of the Colorado Automobile Dealers Association. “However, our new car dealers in metro Denver remain optimistic about the future of their businesses and we believe a strong pent up demand for new cars and more fuel efficient cars will be realized when the economy improves.”

The economy is already showing signs of improvement. But analysts say the car industry is one of the last industries to notice any improvement. Weary consumers usually hold off major purchases until a true feeling of stability is realized, say analysts interviewed by the Denver Daily News.

Auto registration statistics in Colorado mirror this trend. While the state’s unemployment rate stood at 6.9 percent in November and there are fewer Colorado companies conducting mass layoffs, consumers are still hesitant to purchase new vehicles.

Registrations declined by 9.1 percent for November compared with the same period for 2008. Light truck registrations decreased at a rate of 5.6 percent for November, while care registrations decreased at a rate of 13.4 percent.

Another indication that consumers remain thrifty in the area of new vehicle purchases is that the only brand to show a positive increase in sales was the Kia, an economy class, inexpensive vehicle. Kia showed a 23.9 percent increase in sales in Colorado.

It was a year during which auto dealers and manufacturers failed while the government rushed to rescue the industry. More than a dozen Colorado auto dealers were shut down this year as Chrysler, LLC, and General Motors closed hundreds of dealerships across the nation.

Colorado auto dealers declared “Black Tuesday” on the day when the dealerships began closing down as part of the two companies’ bankruptcy restructuring moves.

The government rushed to the rescue with an $82 billion bailout, of which it is expected to lose $30 billion. A second program, the so-called “Cash for Clunkers” program, assisted auto dealers with sales. But in Colorado, dealers complained about mounds of paperwork and bureaucratic tape that kept some from getting paid in the time they had expected.

Jackson said the decline in new-vehicle registrations in Colorado is an indication of a “hangover” from the Cash for Clunkers program, according to the Denver Post. The program provided rebates for trading in clunkers for a new car with better fuel economy.

About 8,900 Coloradans took advantage of the program, according to Jackson.

The report released by the trade group last week reflects registrations versus sales, and therefore reflects timing closer to two months after actual vehicle sales due to delays in registration paperwork, he said.

John Medved, owner of Medved Autoplex, said holiday sales are already an indication that 2010 is going to be a much better year for dealers than was 2009. Medved’s sales are up anywhere from 15-22 percent over holiday sales last year, he said.

“That’s just really exciting for us,” he said.

Meanwhile, Medved is also seeing more consumers coming in on their second or third trade cycle, meaning their vehicles are pushing 150,000-200,000 miles. He said consumers simply can’t keep pushing their vehicles to the limit, so they’re realizing it would be wise to shop for a new vehicle instead of pumping money into their old ones.

“You can only push these things for so long, and then the money to keep them going becomes more than to buy a new one,” said Medved. “So, we’re certainly optimistic.”

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