Car dealers rolling along

Napa County dealers hanging tough, state figures slide

By JENNIFER HUFFMAN
Register Business Writer

While California new car sales are down compared to even a sluggish 2007, Napa county dealers are holding their own.

California New Car Dealers Association statistics show that in the first two quarters of 2008 new car sales statewide slid 18 percent compared to last year. But California Department of Motor Vehicle records comparing the first seven months of 2008 and the same period in 2007 show sales are off just 3 percent in Napa County.

The DMV data shows some Napa County dealers have increased sales as much as 21 percent so far this year, while others are down as much as 40 percent.

According to the National Automobile Dealers Association, sales for new vehicles nationwide are down 10.5 percent through July 2008, compared to the first seven months of 2007.

“While the national market struggles, as a group, we’re generally pretty healthy here,” said Scott Jenson, president of Jenson Motor Center.

Jenson Motor Center and Jimmy Vasser Chevrolet-Toyota are the dealers that moved the most volume and have seen a substantial boost in sales so far this year.

Other dealers have struggled, but have seen gains in specific areas, like used vehicle sales, or with specific models that only sip, rather than guzzle,  gasoline.

All are seeing a shift in consumer preferences because of gas prices and economic worries.

“Business certainly has been challenging, as it has been for all dealers this year,” said Kevin Massie, owner of Napa Ford Lincoln Mercury, citing the down housing market and shaky consumer confidence.

Local shoppers seem to have one thing in mind when it comes to buying a new car, and it’s the number 30 — as in 30 mpg.

“Fuel economy is (on people’s) minds,” said Massie. With gas prices rising sharply earlier this summer and still hovering around $4 per gallon, Massie said owners of larger vehicles are looking to trade down to smaller, more fuel-efficient vehicles.

That, in turn, impacts sellers. “Trade-in values on SUVs have decreased, in some cases significantly,” said Massie. At the same time, trade-in values of used smaller cars have gone up.

Little car, big interest

Dealerships that have popular small cars are benefiting from the trend.

“The shift from big cars to smaller cars has definitely increased our volume,” said Napa Nissan owner Vince Compagno.

Compagno finds himself with a bit of a supply problem for the smaller Nissan sedans. “Normally I have quite a few (but) now I just have a handful of them. Those cars are really selling well right now.”

At Kastner Honda Pontiac Olds GMC, owner Bill Kastner, Sr. said he is sold out of the Honda Civic.

Nationwide, truck sales are down 19.3 percent, but locally, “People are still buying trucks,” said Jenson.

“If you have a family with three kids and they play soccer or softball, you need a bigger car,” he said, adding that many people need trucks for work.

“Two years ago a guy would buy a truck just to have it. Now that people are more sensitive about gas, they’re buying trucks for need.”

Massie said downsizing is hitting the truck market, too.

Sales of the smaller truck Ford Ranger “have been tremendous this year,” he said.

“We’re selling a lot of used trucks,” said Bob Kleis, general manager of Jimmy Vasser Chevrolet-Toyota. “People are trading in trucks to get better fuel-economy vehicles, and the people who need trucks are buying that used truck. There’s still definitely a truck and SUV market out there.”

Used car sales at Napa Ford are up 38 percent from the first seven months of 2007 compared to the same period today.

“Customers are looking for less expensive cars,” said Massie. “It’s that simple. And you can get a less expensive car buying used.”

The price of driving

The recent easing of record fuel costs might also be helping local dealers.

“Earlier this summer there was a lot of anxiety about gas prices,” said Jenson. “But now that prices are lowering, people feel like prices aren’t out of control.

“We know we’re not going back to $2 a gallon (but) consumers are more confident now.”

At the same time, some buyers have a harder time getting financing.

At Napa Ford, Massie said, “We have customers that want to get vehicles but are in the process of losing a home,” said Massie. The number of buyers in distress “is much greater than this time a year ago.”

Why would someone in financial trouble buy a car?

Even if people are moving or giving up on home ownership, he said, “They still need reliable transportation to get to work, school and church.”

“We are seeing people that have challenged credit … (or) foreclosures pending” said Kleis. “We are seeing more cars for sale in repossession wholesale auctions.

“The mess in the home industry has trickled down into the car industry,” said Compagno.

Vic Feldman, general manager of Napa Chrysler Dodge Jeep Volvo Kia, is also seeing more buyers with credit problems. “But in Napa, many of our customers have great credit.”

Twenty percent of Feldman’s buyers pay all cash, he said. “We’re in an affluent area.”

Jenson and other dealers want locals to shop local for a vehicle.

“It isn’t more expensive to buy a car in Napa,” he said. “At least start by looking locally. We are going to be competitive, price-wise.”

“We have lower overhead compared to stores on the highway,” said Feldman. “Shoppers can get a better deal in Napa. It also helps the city and county of Napa keep the sales tax in town.”

Kastner offered some perspective on the market.

“I’ve been doing this for 44 years and my family for 60 years,” he said. “I’ve been through two other oil crunches, wars, and so many things, but you get past them.”

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